Differential price responses for tobacco consumption: implications for tax incidence

Autores
Cruces, Guillermo Antonio; Falcone, Guillermo Enrique; Puig, Jorge
Año de publicación
2022
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
Increasing tobacco taxes is considered the most effective an cost-eï¬ €ective policy to reduce tobacco consumption. However, a common objection to tobacco taxes is that they tend to rely disproportionately on the poorest individuals since less affluent smokers incur proportionately greater expenditures on cigarettes compared with more affluent smokers. Such objections usually assume that all smokers throughout the income distribution react similarly to an increase in tobacco prices. But, if less affluent smokers are more sensitive to price changes (ie, they have a higher demand price elasticity), reductions in tobacco consumption should be higher at the bottom of the income distribution. This paper uses data from Argentina's Household Expenditure Survey to estimate demand price elasticities for tobacco by income and age groups. Results indicate that less affluent smokers present higher demand price elasticities for cigarettes than more affluent ones. A 10% increase in cigarette prices would decrease consumption by 8.5% (4.4%) for the poorest (richest) smokers. In addition, young people are the most elastic group. These differential elasticities have relevant implications in terms of the distributional incidence of increasing tobacco taxes. As less well-off individuals reduce consumption relatively more, they bear a relatively lower tax burden. Thus, tobacco tax increases may not be regressive as is often believed. As a whole, this paper provides policymakers with relevant arguments for policy discussion and the public debate on common objections to increasing tobacco taxes.
Fil: Cruces, Guillermo Antonio. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Falcone, Guillermo Enrique. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Puig, Jorge. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina
Materia
ECONOMICS
LOW/MIDDLE-INCOME COUNTRY
PUBLIC POLICY
TAXATION
TOBACCO INDUSTRY
Nivel de accesibilidad
acceso abierto
Condiciones de uso
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
Repositorio
CONICET Digital (CONICET)
Institución
Consejo Nacional de Investigaciones Científicas y Técnicas
OAI Identificador
oai:ri.conicet.gov.ar:11336/212630

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spelling Differential price responses for tobacco consumption: implications for tax incidenceCruces, Guillermo AntonioFalcone, Guillermo EnriquePuig, JorgeECONOMICSLOW/MIDDLE-INCOME COUNTRYPUBLIC POLICYTAXATIONTOBACCO INDUSTRYhttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5Increasing tobacco taxes is considered the most effective an cost-eï¬ €ective policy to reduce tobacco consumption. However, a common objection to tobacco taxes is that they tend to rely disproportionately on the poorest individuals since less affluent smokers incur proportionately greater expenditures on cigarettes compared with more affluent smokers. Such objections usually assume that all smokers throughout the income distribution react similarly to an increase in tobacco prices. But, if less affluent smokers are more sensitive to price changes (ie, they have a higher demand price elasticity), reductions in tobacco consumption should be higher at the bottom of the income distribution. This paper uses data from Argentina's Household Expenditure Survey to estimate demand price elasticities for tobacco by income and age groups. Results indicate that less affluent smokers present higher demand price elasticities for cigarettes than more affluent ones. A 10% increase in cigarette prices would decrease consumption by 8.5% (4.4%) for the poorest (richest) smokers. In addition, young people are the most elastic group. These differential elasticities have relevant implications in terms of the distributional incidence of increasing tobacco taxes. As less well-off individuals reduce consumption relatively more, they bear a relatively lower tax burden. Thus, tobacco tax increases may not be regressive as is often believed. As a whole, this paper provides policymakers with relevant arguments for policy discussion and the public debate on common objections to increasing tobacco taxes.Fil: Cruces, Guillermo Antonio. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Falcone, Guillermo Enrique. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Puig, Jorge. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; ArgentinaB M J Publishing Group2022-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/212630Cruces, Guillermo Antonio; Falcone, Guillermo Enrique; Puig, Jorge; Differential price responses for tobacco consumption: implications for tax incidence; B M J Publishing Group; Tobacco Control; 1-2022; 1-60964-4563CONICET DigitalCONICETenginfo:eu-repo/semantics/altIdentifier/url/https://tobaccocontrol.bmj.com/lookup/doi/10.1136/tobaccocontrol-2021-056846info:eu-repo/semantics/altIdentifier/doi/10.1136/tobaccocontrol-2021-056846info:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by-nc-sa/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2025-09-29T10:22:50Zoai:ri.conicet.gov.ar:11336/212630instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982025-09-29 10:22:50.908CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse
dc.title.none.fl_str_mv Differential price responses for tobacco consumption: implications for tax incidence
title Differential price responses for tobacco consumption: implications for tax incidence
spellingShingle Differential price responses for tobacco consumption: implications for tax incidence
Cruces, Guillermo Antonio
ECONOMICS
LOW/MIDDLE-INCOME COUNTRY
PUBLIC POLICY
TAXATION
TOBACCO INDUSTRY
title_short Differential price responses for tobacco consumption: implications for tax incidence
title_full Differential price responses for tobacco consumption: implications for tax incidence
title_fullStr Differential price responses for tobacco consumption: implications for tax incidence
title_full_unstemmed Differential price responses for tobacco consumption: implications for tax incidence
title_sort Differential price responses for tobacco consumption: implications for tax incidence
dc.creator.none.fl_str_mv Cruces, Guillermo Antonio
Falcone, Guillermo Enrique
Puig, Jorge
author Cruces, Guillermo Antonio
author_facet Cruces, Guillermo Antonio
Falcone, Guillermo Enrique
Puig, Jorge
author_role author
author2 Falcone, Guillermo Enrique
Puig, Jorge
author2_role author
author
dc.subject.none.fl_str_mv ECONOMICS
LOW/MIDDLE-INCOME COUNTRY
PUBLIC POLICY
TAXATION
TOBACCO INDUSTRY
topic ECONOMICS
LOW/MIDDLE-INCOME COUNTRY
PUBLIC POLICY
TAXATION
TOBACCO INDUSTRY
purl_subject.fl_str_mv https://purl.org/becyt/ford/5.2
https://purl.org/becyt/ford/5
dc.description.none.fl_txt_mv Increasing tobacco taxes is considered the most effective an cost-eï¬ €ective policy to reduce tobacco consumption. However, a common objection to tobacco taxes is that they tend to rely disproportionately on the poorest individuals since less affluent smokers incur proportionately greater expenditures on cigarettes compared with more affluent smokers. Such objections usually assume that all smokers throughout the income distribution react similarly to an increase in tobacco prices. But, if less affluent smokers are more sensitive to price changes (ie, they have a higher demand price elasticity), reductions in tobacco consumption should be higher at the bottom of the income distribution. This paper uses data from Argentina's Household Expenditure Survey to estimate demand price elasticities for tobacco by income and age groups. Results indicate that less affluent smokers present higher demand price elasticities for cigarettes than more affluent ones. A 10% increase in cigarette prices would decrease consumption by 8.5% (4.4%) for the poorest (richest) smokers. In addition, young people are the most elastic group. These differential elasticities have relevant implications in terms of the distributional incidence of increasing tobacco taxes. As less well-off individuals reduce consumption relatively more, they bear a relatively lower tax burden. Thus, tobacco tax increases may not be regressive as is often believed. As a whole, this paper provides policymakers with relevant arguments for policy discussion and the public debate on common objections to increasing tobacco taxes.
Fil: Cruces, Guillermo Antonio. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Falcone, Guillermo Enrique. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Puig, Jorge. Universidad Nacional de la Plata. Facultad de Cs.economicas. Instituto de Investigaciones Economicas.; Argentina
description Increasing tobacco taxes is considered the most effective an cost-eï¬ €ective policy to reduce tobacco consumption. However, a common objection to tobacco taxes is that they tend to rely disproportionately on the poorest individuals since less affluent smokers incur proportionately greater expenditures on cigarettes compared with more affluent smokers. Such objections usually assume that all smokers throughout the income distribution react similarly to an increase in tobacco prices. But, if less affluent smokers are more sensitive to price changes (ie, they have a higher demand price elasticity), reductions in tobacco consumption should be higher at the bottom of the income distribution. This paper uses data from Argentina's Household Expenditure Survey to estimate demand price elasticities for tobacco by income and age groups. Results indicate that less affluent smokers present higher demand price elasticities for cigarettes than more affluent ones. A 10% increase in cigarette prices would decrease consumption by 8.5% (4.4%) for the poorest (richest) smokers. In addition, young people are the most elastic group. These differential elasticities have relevant implications in terms of the distributional incidence of increasing tobacco taxes. As less well-off individuals reduce consumption relatively more, they bear a relatively lower tax burden. Thus, tobacco tax increases may not be regressive as is often believed. As a whole, this paper provides policymakers with relevant arguments for policy discussion and the public debate on common objections to increasing tobacco taxes.
publishDate 2022
dc.date.none.fl_str_mv 2022-01
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/11336/212630
Cruces, Guillermo Antonio; Falcone, Guillermo Enrique; Puig, Jorge; Differential price responses for tobacco consumption: implications for tax incidence; B M J Publishing Group; Tobacco Control; 1-2022; 1-6
0964-4563
CONICET Digital
CONICET
url http://hdl.handle.net/11336/212630
identifier_str_mv Cruces, Guillermo Antonio; Falcone, Guillermo Enrique; Puig, Jorge; Differential price responses for tobacco consumption: implications for tax incidence; B M J Publishing Group; Tobacco Control; 1-2022; 1-6
0964-4563
CONICET Digital
CONICET
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/https://tobaccocontrol.bmj.com/lookup/doi/10.1136/tobaccocontrol-2021-056846
info:eu-repo/semantics/altIdentifier/doi/10.1136/tobaccocontrol-2021-056846
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
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eu_rights_str_mv openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
dc.format.none.fl_str_mv application/pdf
application/pdf
application/pdf
dc.publisher.none.fl_str_mv B M J Publishing Group
publisher.none.fl_str_mv B M J Publishing Group
dc.source.none.fl_str_mv reponame:CONICET Digital (CONICET)
instname:Consejo Nacional de Investigaciones Científicas y Técnicas
reponame_str CONICET Digital (CONICET)
collection CONICET Digital (CONICET)
instname_str Consejo Nacional de Investigaciones Científicas y Técnicas
repository.name.fl_str_mv CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas
repository.mail.fl_str_mv dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar
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