Are Tobacco Taxes Really Regressive? : Evidence from Chile

Fuchs, Alan ; Meneses, Francisco

World Bank, Washington, DC

关键词: taxes;    tobacco;    poverty;    distributional impact;   

DOI  :  10.1596/1813-9450-7988
RP-ID  :  WPS7988

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Tobacco taxes are deemed regressive,because the poorest families tend to allocate larger sharesof their budget to purchase tobacco. However, as taxes alsodiscourage tobacco use, some of the most adverse effects,including higher medical expenses, lower life expectancy atbirth, added years of disability among smokers, andreduction in the quality of life, among others, would bereduced. This paper describes and simulates the effects ofthe tobacco tax on incomes in Chile assuming three differentprice-elasticity scenarios for different income deciles ofthe population. The results show that although increasingthe price of tobacco through higher taxes generates negativeincome variations across all groups in a population, under amore comprehensive scenario that includes benefits throughlower medical expenses and an increase in working years, theresults invert, and the overall monetary effect of thetaxation policy becomes positive. Moreover, the reduction inmedical expenses seems to be the main driver of the increasein net incomes, because of the reduction in tobacco-relatedproblems that require expensive treatments. Lastly, as thedistributional effects of tobacco taxes are directly relatedto the long-term price elasticities of tobacco consumption,it would be advisable to coordinate taxation and behavioralchange policies across income groups.