ЕКИП – Експертен клуб за икономика и политика Едно различно мнение
There is fast-growing empirical evidence of how taxation affects tobacco use. In this process the important aspects to consider include the pass-on of taxes to prices, the substitutability between different tobacco and/or nicotine products, and the price elasticities (kown as well as cross-price elasticities). These all ultimately affect consumption behaviour and the dynamics thereof.
This policy paper confirms previous findings that taxes have the potential to mould consumer preferences. Therefore policymakers should seek to design optimal taxation strategies targeting pre-defined goals – implying, in the context of tobacco products, a reduction of prevalence of the consumption of the more harmful traditional combustible products while, at the same time, inducing users to choose less harmful tobacco alternatives instead, when they do not stop fully any tobacco or nicotine consumption.
The European Commission proposal for revision of the tobacco excise rules will have bigger effect on tobacco consumer behaviour in Member States with lower relative income like Bulgaria. The model applied here draws on existing theory and empirical literature, producing alternative solutions under three plausible trajectories, reflecting the evolving EU market development and the regulatory context.
If taxes on tobacco products are to be raised, users would reduce consumption. This would tend to offset expected gains in tax revenue but, from a health policy perspective, the factor deserving utmost consideration is the degrees of tax variation between alternative/substitutable products and traditional tobacco products. If minimum tax levels are to be raised and equalised across all tobacco and nicotine categories, consumers will be disincentivised to switch from traditional to less harmful products.
This will constitute the least desirable outcome health-wise, in terms of the prevalence of consumption of tobacco products and the absolute numbers of smokers. This conclusion is valid both for Bulgaria, the Smokers’ Paradise in the EU, and other Member States with rather different market and socio-economic specifics.
|Read the full policy paper here|
