Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine

Tobacco taxes are usually considered regressive, as the poorest individuals allocate larger shares of their budget toward the purchase of tobacco-related products. However, because these taxes also discourage tobacco use, some of the most adverse e...

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Main Authors:	Fuchs, Alan, Meneses, Francisco
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2017
Subjects:	TOBACCO CONTROL REGRESSIVE TAX TOBACCO TAX TAXATION
Online Access:	http://documents.worldbank.org/curated/en/934621509107306525/Regressive-or-progressive-the-effect-of-tobacco-taxes-in-Ukraine http://hdl.handle.net/10986/28613

id	okr-10986-28613
recordtype	oai_dc
spelling	okr-10986-286132021-06-08T14:42:45Z Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine Fuchs, Alan Meneses, Francisco TOBACCO CONTROL REGRESSIVE TAX TOBACCO TAX TAXATION Tobacco taxes are usually considered regressive, as the poorest individuals allocate larger shares of their budget toward the purchase of tobacco-related products. However, because these taxes also discourage tobacco use, some of the most adverse effects and their economic costs are reduced, including lower life expectancy at birth, higher medical expenses, increased years of disability among smokers, and the effects of secondhand smoke. This paper projects the effects of an increase in the tobacco tax on household welfare in Ukraine. It considers three price-elasticity scenarios among income deciles of the population. The results show that although tobacco taxes are often criticized for being regressive in the short run, in a more comprehensive scenario that includes medical expenses and working years, the benefits of tobacco taxes far exceed the increase in tax liability, benefitting in large measure lower income households. The results also indicate that lower health expenditure seems to be the main driver, because of the reduction in tobacco-related diseases that require expensive treatments. Tobacco taxes are also associated with positive distributional effects related to the higher long-term price elasticities of tobacco consumption. 2017-10-30T21:38:11Z 2017-10-30T21:38:11Z 2017-10 Working Paper http://documents.worldbank.org/curated/en/934621509107306525/Regressive-or-progressive-the-effect-of-tobacco-taxes-in-Ukraine http://hdl.handle.net/10986/28613 English Policy Research Working Paper;No. 8227 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Ukraine
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	TOBACCO CONTROL REGRESSIVE TAX TOBACCO TAX TAXATION
spellingShingle	TOBACCO CONTROL REGRESSIVE TAX TOBACCO TAX TAXATION Fuchs, Alan Meneses, Francisco Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
geographic_facet	Europe and Central Asia Ukraine
relation	Policy Research Working Paper;No. 8227
description	Tobacco taxes are usually considered regressive, as the poorest individuals allocate larger shares of their budget toward the purchase of tobacco-related products. However, because these taxes also discourage tobacco use, some of the most adverse effects and their economic costs are reduced, including lower life expectancy at birth, higher medical expenses, increased years of disability among smokers, and the effects of secondhand smoke. This paper projects the effects of an increase in the tobacco tax on household welfare in Ukraine. It considers three price-elasticity scenarios among income deciles of the population. The results show that although tobacco taxes are often criticized for being regressive in the short run, in a more comprehensive scenario that includes medical expenses and working years, the benefits of tobacco taxes far exceed the increase in tax liability, benefitting in large measure lower income households. The results also indicate that lower health expenditure seems to be the main driver, because of the reduction in tobacco-related diseases that require expensive treatments. Tobacco taxes are also associated with positive distributional effects related to the higher long-term price elasticities of tobacco consumption.
format	Working Paper
author	Fuchs, Alan Meneses, Francisco
author_facet	Fuchs, Alan Meneses, Francisco
author_sort	Fuchs, Alan
title	Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
title_short	Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
title_full	Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
title_fullStr	Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
title_full_unstemmed	Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine
title_sort	regressive or progressive? : the effect of tobacco taxes in ukraine
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/934621509107306525/Regressive-or-progressive-the-effect-of-tobacco-taxes-in-Ukraine http://hdl.handle.net/10986/28613
_version_	1764467282501697536

Regressive or Progressive? : The Effect of Tobacco Taxes in Ukraine

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