The Distributional of Impacts of Cigarette Taxation in Bangladesh
Despite the obvious positive health impacts of tobacco taxation, an argument raised against it is that poor households bear the burden of the increased prices because of their higher share of spending on tobacco. This report includes estimates of t...
| Main Authors: | , , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/956801528732279043/The-distributional-of-impacts-of-cigarette-taxation-in-Bangladesh http://hdl.handle.net/10986/30011 |
| Summary: | Despite the obvious positive health
impacts of tobacco taxation, an argument raised against it
is that poor households bear the burden of the increased
prices because of their higher share of spending on tobacco.
This report includes estimates of the distributional impacts
of price rises on cigarettes under various scenarios using
the Household Income and Expenditure Survey (HIES) 2016/17.
One contribution of this analysis is to quantify the impacts
by allowing price elasticities to vary across consumption
deciles. This shows that an increase in the price of
cigarettes in Bangladesh has small consumption impacts and
does not significantly change the poverty rate or
consumption inequality. These findings stem from relatively
even cigarette consumption patterns between less and more
welloff households. These results hold even if one considers
some small substitution through the use of bidis, which are
largely consumed by the poor. The short-term consumption
impacts are also negligible compared with the estimated
gains because of savings in medical costs and the greater
number of productive years of life. |
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