Long-Run Impacts of Increasing Tobacco Taxes : Evidence from South Africa

Fuchs, Alan ; Del Carmen, Giselle ; Mukong, Alfred Kechia

Washington, DC: World Bank

关键词: TOBACCO TAX;    TOBACCO CONSUMPTION;    TAXATION;    EXCISE TAX;    SIN TAX;   

DOI  :  10.1596/1813-9450-8369
RP-ID  :  WPS8369

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 considered aneffective policy tool to reduce tobacco consumption andproduce long-run benefits that outweigh the costs associatedwith a price increase. Through this policy, some of the mostadverse effects and economic costs of smoking can bereduced, including shorter life expectancy, higher medicalexpenses, added years of disability among smokers, and theeffects of secondhand smoke. Nonetheless, tobacco taxes areoften considered regressive because low-income householdstend to allocate a larger share of their budgets topurchasing tobacco products. This paper uses an extendedcost-benefit analysis to estimate the distributional effectof tobacco taxes on household welfare in South Africa. Theanalysis considers the effect on household income through anincrease in tobacco prices, changes in medical expenses, andthe prolongation of working years. The results indicate thata rise in tobacco prices initially generates negative incomevariations across all groups in the population. If benefitsthrough lower medical expenses and an expansion in workingyears are considered, the negative effect is reduced,particularly in medium- and upper-bound elasticities.Consequently, the aggregate net effect is progressive andbenefits the bottom deciles more than the richer ones.Overall, tobacco tax increases exert a small, but positiveeffect in the presence of low conditional tobacco priceelasticity. If the population is more responsive to tobaccoprice changes (or participation elasticity estimates areincluded), then they would experience even more gains fromthe health and work benefits. More research is needed toclarify the distributional effects of tobacco taxation inSouth Africa.