The Distributional 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 note includes estimates of the...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/688821536776691954/The-Distributional-Impacts-of-Cigarette-Taxation-in-Bangladesh http://hdl.handle.net/10986/30424 |
| 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 note includes estimates of the distributional impacts
of price rises on cigarettes under various scenarios using
the Household Income and Expenditure Survey 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
well-off households. These results hold even considering
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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