Publication: Increasing Taxes on Tobacco in Low and Middle-Income Countries: Hurting or Saving the Poor?
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Published
2020-07
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Date
2020-08-10
Author(s)
Gonzalez Icaza, María Fernanda
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Abstract
Policy makers hesitate to increase tobacco taxes over concerns about taxes being regressive and potentially increasing poverty and inequality. This note summarizes a set of studies of the effects of raising tobacco taxes in 11 low and middle-income countries using an extended cost-benefit analysis (ECBA) and harmonized national household budget survey data and introduces the TOBACTAX Tool. The studies find that demand price elasticities for tobacco products are larger among lower-income households and that the poor receive the largest long-term gains from tobacco taxation. Tobacco taxes have progressive long-term effects due to lower medical expenses and added years of productive life, which contribute to poverty reduction in most countries studied. TOBACTAX Tool can help replicate such analyses elsewhere.
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“Fuchs Tarlovsky, Alan; Gonzalez Icaza, María Fernanda. 2020. Increasing Taxes on Tobacco in Low and Middle-Income Countries: Hurting or Saving the Poor?. Poverty and Equity Notes;No. 25. © World Bank. http://hdl.handle.net/10986/34309 License: CC BY 3.0 IGO.”
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