Tobacco taxes and regressivity

Gospodinov, Nikolay; Irvine, Ian

doi:10.1016/j.jhealeco.2008.10.010

Cited by 38 publications

(19 citation statements)

References 29 publications

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“…The young and lower socio-economic classes were generally more responsive to price changes (IARC, 2011). This is in broad agreement with other studies on the issue (Gospodinov and Irvine, 2009;Gruber et al, 2003). The review of the literature confirmed therefore that increase in taxation of cigarettes and other tobacco products is a key strategy to decrease smoking prevalence and consumption.…”

Section: Contents Lists Available At Sciverse Sciencedirectsupporting

confidence: 91%

Tobacco control: Economic aspects of smoking

Gallus

Vecchia

2012

Preventive Medicine

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Section: Contents Lists Available At Sciverse Sciencedirectsupporting

confidence: 91%

Tobacco control: Economic aspects of smoking

Gallus

Vecchia

2012

Preventive Medicine

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“…Only the own-price elasticity of tobacco seems implausible, with a value of greater than 2 in absolute terms under both models. A review of previous literature (for example, Gospodinov and Irvine (2009); Escario and Molina (2004); Chaloupka and Tauras (2011)) suggests that the own-price elasticity of tobacco should be closer to −0.3. Larger differences between the AIDS and QUAIDS models occur when we include demographics.…”

Section: Elasticitiesmentioning

confidence: 99%

Indirect tax reform and the specification of demand: the case of Ireland

Savage

2015

Int Tax Public Finance

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This paper examines the sensitivity of marginal tax reform analysis to changes in the underlying demand system. In particular, we analyse the sensitivity of results from Ahmad and Stern's (J Publ Econ 25(3):259-298, 1984) marginal tax reform model to different specifications of Deaton and Muellbauer's (Am Econ Rev 70(3):312-326, 1980) Almost Ideal Demand System (AIDS) and Banks et al.'s (Rev Econ Stat 79 (4):527-539, 1997) Quadratic AIDS. Using Irish Household Budget Survey data, we show that tax reform results exhibit a low degree of sensitivity to changes in the underlying demand system. An adjustment for a mass of observed zero-expenditures in the data for certain goods produces most sensitivity in the tax reform results. Even in these cases, many of the tax reform recommendations remain constant. Including demerit good arguments in the tax reform model can substantially alter the tax reform recommendations relating to demerit goods. Notably though, when we include these arguments in the tax reform model, the results are particularly insensitive to changes in the underlying demand system.

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“…Viscusi12 argues that cigarette taxes in the USA fell predominantly on the very poor. Gospodirov and Irvine21 find that price elasticity for different socioeconomic groups is almost flat, and therefore the concerns about burden of tax increases are valid for Canada. ii On the other hand, Younger et al 22 found that in Madagascar excise taxes on tobacco are progressive but argue that households under-report their tobacco and alcohol consumption in their survey.…”

Section: Introductionmentioning

confidence: 99%

Who pays the most cigarette tax in Turkey

Önder

Yurekli

2014

Tob Control

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Background Although higher taxation of tobacco products is considered the most cost-effective tobacco control policy, its negative impact on low-income groups is one of the arguments used against it. Objective To investigate the impact of current excise taxes and the increases of excise taxes on tobacco and household expenditures by expenditure tertiles, and examine who pays excise taxes in general. Method Impacts of excise taxes on cigarettes are examined with a budgetary approach. We first estimate the price elasticity of cigarettes by expenditure tertiles using data from the 2003 Turkish Household Expenditure Survey, the most recent data set covering detailed tobacco product information relevant to our analysis. We then conduct a number of simulation analyses by increasing the excise taxes per pack of cigarettes and examine the impacts of these increases on household expenditures. Finally, as excise tax increases, we predict the total excise tax paid by households in different expenditure tertiles and compare the concentration curve of excise tax spending with the Lorenz curve showing the cumulative share of total household expenditures by expenditure tertiles. We estimate the progressivity coefficient that measures the area between the Lorenz and concentration curves. Results The low-income group is found to be the most sensitive to tax and price increases. It spends a relatively higher share of the household expenditure on cigarettes compared with higher income groups. However, the results suggest a different outcome as excise tax increases; the share of household expenditures spent on cigarettes declines for all household tertiles but a significant reduction occurs on the lowest expenditure tertile, suggesting that increases in excise taxes are progressive. Furthermore, the highest expenditure tertile pays the highest excise tax among expenditure tertiles, and their share in total excise revenue increases as the excise tax per pack of cigarettes increases. Conclusions The poor smoking households benefit the most from increases in excise taxes; from a budgetary perspective, as they reduce their smoking consumption significantly, the share of their excise payment in total household expenditures declines. From a health perspective, they are likely to have more health benefits as their consumption reduces. Government revenues are also predicted to increase with increased excise taxes, and the government can allocate a part of these revenue increases on implementing and enforcing other tobacco control measures including cessation support and smokefree environments. © 2015, BMJ Publishing Group. All rights reserved

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Tobacco taxes and regressivity

Cited by 38 publications

References 29 publications

Tobacco control: Economic aspects of smoking

Tobacco control: Economic aspects of smoking

Indirect tax reform and the specification of demand: the case of Ireland

Who pays the most cigarette tax in Turkey

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