Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study
Cigarette consumption has been increasing in Indonesia, as in many other developing countries, causing a rising burden of disease and premature death. Higher excise taxes have proved effective in many countries in reducing cigarette consumption and...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2005/02/5702526/cigarette-consumption-taxation-household-income-indonesia-case-study http://hdl.handle.net/10986/13737 |
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okr-10986-137372021-04-23T14:03:09Z Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study Adioetomo, Sri Moertiningsih Djutaharta, Triasih Hendratno ADVERTISING AGED BRANDS BURDEN OF DISEASE CATERING CONSUMPTION INCREASES DAMAGES DEVELOPED COUNTRIES DISEASE CONTROL DISEASES ECONOMIC IMPACT ECONOMIC STATUS ECONOMISTS EDUCATION EPIDEMIOLOGY EXCISE TAXES EXPENDITURES EXPORTS FORESTRY GOODS/SERVICES GOVERNMENT REGULATION HEALTH COSTS HEALTH EFFECTS HEALTH IMPACTS HEALTH RISKS HEALTH WARNINGS HUMAN DEVELOPMENT IMPORTS INCOME INCOME GROUPS INCOME LEVELS INSURANCE INTERVENTION LABOR FORCE MANAGERS MARKETING MEDIA NICOTINE DEPENDENCE NUTRITION PARTNERSHIP POLICY DECISIONS POLICY MAKERS PREMATURE DEATH PRICE CHANGES PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE INCREASES PRICES/TAXES PRODUCERS PUBLIC HEALTH PURCHASING PURCHASING POWER REGRESSION ANALYSIS RETAIL RETAIL PRICES SALES SEX SMOKERS SMOKING SOCIAL STATUS SUBSTITUTION TAX RATES TAX REVENUE TAX REVENUES TAXATION TOBACCO TOBACCO CONTROL TOBACCO USE WORKERS Cigarette consumption has been increasing in Indonesia, as in many other developing countries, causing a rising burden of disease and premature death. Higher excise taxes have proved effective in many countries in reducing cigarette consumption and raising government revenues. This study examines the effect of higher prices/taxes on the decision to smoke, the quantity of cigarettes consumed by smokers in different income groups in Indonesia, and government revenues. It uses 1999 Social and Economic Survey (SUSENAS) household data, with households as the unit of analysis. There was at least one smoker in 57 percent of all households. Most households smoked kretek cigarettes with filters (64 percent), or without filters (31 percent). Average household monthly cigarette consumption was 18 packs of 16 cigarettes. Per capita cigarette consumption was higher for higher income households: 7.83 packs per month, compared to 4 packs for low-income households. On average, households spent 6.22 percent of their total income on cigarettes and kreteks, lower-income households spent the highest percentage. The study suggests that price is not a significant factor in household decisions to smoke or not, but has a significant effect on the quantity of cigarettes smoked: each 10 percent increase in price would reduce total cigarette consumption by 6 percent. The reduction would be higher-nearly 7 percent-among low-income households, and lower-3 percent-among high-income households. Cigarette consumption increases as income rises: a 10 percent increase in household income would increase consumption by 6.5 percent, with a particularly strong effect among low-income households-a 9 percent increase-but little change among high income households-an increase of less than 1 percent. Simulations show that a 10 percent tax increase that raised cigarette prices by 4.9 percent would reduce consumption by 3 percent, and increase tax revenues by 6.7 percent, ceteris paribus, including assuming no significant switching among cigarette products with different prices and tax levels. 2013-06-04T19:41:40Z 2013-06-04T19:41:40Z 2005-02 http://documents.worldbank.org/curated/en/2005/02/5702526/cigarette-consumption-taxation-household-income-indonesia-case-study http://hdl.handle.net/10986/13737 English en_US Health, Nutrition and Population (HNP) discussion paper; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research East Asia and Pacific Indonesia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADVERTISING AGED BRANDS BURDEN OF DISEASE CATERING CONSUMPTION INCREASES DAMAGES DEVELOPED COUNTRIES DISEASE CONTROL DISEASES ECONOMIC IMPACT ECONOMIC STATUS ECONOMISTS EDUCATION EPIDEMIOLOGY EXCISE TAXES EXPENDITURES EXPORTS FORESTRY GOODS/SERVICES GOVERNMENT REGULATION HEALTH COSTS HEALTH EFFECTS HEALTH IMPACTS HEALTH RISKS HEALTH WARNINGS HUMAN DEVELOPMENT IMPORTS INCOME INCOME GROUPS INCOME LEVELS INSURANCE INTERVENTION LABOR FORCE MANAGERS MARKETING MEDIA NICOTINE DEPENDENCE NUTRITION PARTNERSHIP POLICY DECISIONS POLICY MAKERS PREMATURE DEATH PRICE CHANGES PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE INCREASES PRICES/TAXES PRODUCERS PUBLIC HEALTH PURCHASING PURCHASING POWER REGRESSION ANALYSIS RETAIL RETAIL PRICES SALES SEX SMOKERS SMOKING SOCIAL STATUS SUBSTITUTION TAX RATES TAX REVENUE TAX REVENUES TAXATION TOBACCO TOBACCO CONTROL TOBACCO USE WORKERS |
| spellingShingle |
ADVERTISING AGED BRANDS BURDEN OF DISEASE CATERING CONSUMPTION INCREASES DAMAGES DEVELOPED COUNTRIES DISEASE CONTROL DISEASES ECONOMIC IMPACT ECONOMIC STATUS ECONOMISTS EDUCATION EPIDEMIOLOGY EXCISE TAXES EXPENDITURES EXPORTS FORESTRY GOODS/SERVICES GOVERNMENT REGULATION HEALTH COSTS HEALTH EFFECTS HEALTH IMPACTS HEALTH RISKS HEALTH WARNINGS HUMAN DEVELOPMENT IMPORTS INCOME INCOME GROUPS INCOME LEVELS INSURANCE INTERVENTION LABOR FORCE MANAGERS MARKETING MEDIA NICOTINE DEPENDENCE NUTRITION PARTNERSHIP POLICY DECISIONS POLICY MAKERS PREMATURE DEATH PRICE CHANGES PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE INCREASES PRICES/TAXES PRODUCERS PUBLIC HEALTH PURCHASING PURCHASING POWER REGRESSION ANALYSIS RETAIL RETAIL PRICES SALES SEX SMOKERS SMOKING SOCIAL STATUS SUBSTITUTION TAX RATES TAX REVENUE TAX REVENUES TAXATION TOBACCO TOBACCO CONTROL TOBACCO USE WORKERS Adioetomo, Sri Moertiningsih Djutaharta, Triasih Hendratno Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| geographic_facet |
East Asia and Pacific Indonesia |
| relation |
Health, Nutrition and Population (HNP) discussion paper; |
| description |
Cigarette consumption has been
increasing in Indonesia, as in many other developing
countries, causing a rising burden of disease and premature
death. Higher excise taxes have proved effective in many
countries in reducing cigarette consumption and raising
government revenues. This study examines the effect of
higher prices/taxes on the decision to smoke, the quantity
of cigarettes consumed by smokers in different income groups
in Indonesia, and government revenues. It uses 1999 Social
and Economic Survey (SUSENAS) household data, with
households as the unit of analysis. There was at least one
smoker in 57 percent of all households. Most households
smoked kretek cigarettes with filters (64 percent), or
without filters (31 percent). Average household monthly
cigarette consumption was 18 packs of 16 cigarettes. Per
capita cigarette consumption was higher for higher income
households: 7.83 packs per month, compared to 4 packs for
low-income households. On average, households spent 6.22
percent of their total income on cigarettes and kreteks,
lower-income households spent the highest percentage. The
study suggests that price is not a significant factor in
household decisions to smoke or not, but has a significant
effect on the quantity of cigarettes smoked: each 10 percent
increase in price would reduce total cigarette consumption
by 6 percent. The reduction would be higher-nearly 7
percent-among low-income households, and lower-3
percent-among high-income households. Cigarette consumption
increases as income rises: a 10 percent increase in
household income would increase consumption by 6.5 percent,
with a particularly strong effect among low-income
households-a 9 percent increase-but little change among high
income households-an increase of less than 1 percent.
Simulations show that a 10 percent tax increase that raised
cigarette prices by 4.9 percent would reduce consumption by
3 percent, and increase tax revenues by 6.7 percent, ceteris
paribus, including assuming no significant switching among
cigarette products with different prices and tax levels. |
| format |
Publications & Research :: Working Paper |
| author |
Adioetomo, Sri Moertiningsih Djutaharta, Triasih Hendratno |
| author_facet |
Adioetomo, Sri Moertiningsih Djutaharta, Triasih Hendratno |
| author_sort |
Adioetomo, Sri Moertiningsih |
| title |
Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| title_short |
Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| title_full |
Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| title_fullStr |
Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| title_full_unstemmed |
Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study |
| title_sort |
cigarette consumption, taxation, and household income : indonesia case study |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2005/02/5702526/cigarette-consumption-taxation-household-income-indonesia-case-study http://hdl.handle.net/10986/13737 |
| _version_ |
1764424060926689280 |