Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study

Adioetomo, Sri Moertiningsih ; Djutaharta, Triasih ; Hendratno

World Bank, Washington, DC

关键词: ADVERTISING;    AGED;    BRANDS;    BURDEN OF DISEASE;    CATERING;   

RP-ID  :  31796

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Cigarette consumption has beenincreasing in Indonesia, as in many other developingcountries, causing a rising burden of disease and prematuredeath. Higher excise taxes have proved effective in manycountries in reducing cigarette consumption and raisinggovernment revenues. This study examines the effect ofhigher prices/taxes on the decision to smoke, the quantityof cigarettes consumed by smokers in different income groupsin Indonesia, and government revenues. It uses 1999 Socialand Economic Survey (SUSENAS) household data, withhouseholds as the unit of analysis. There was at least onesmoker in 57 percent of all households. Most householdssmoked kretek cigarettes with filters (64 percent), orwithout filters (31 percent). Average household monthlycigarette consumption was 18 packs of 16 cigarettes. Percapita cigarette consumption was higher for higher incomehouseholds: 7.83 packs per month, compared to 4 packs forlow-income households. On average, households spent 6.22percent of their total income on cigarettes and kreteks,lower-income households spent the highest percentage. Thestudy suggests that price is not a significant factor inhousehold decisions to smoke or not, but has a significanteffect on the quantity of cigarettes smoked: each 10 percentincrease in price would reduce total cigarette consumptionby 6 percent. The reduction would be higher-nearly 7percent-among low-income households, and lower-3percent-among high-income households. Cigarette consumptionincreases as income rises: a 10 percent increase inhousehold income would increase consumption by 6.5 percent,with a particularly strong effect among low-incomehouseholds-a 9 percent increase-but little change among highincome households-an increase of less than 1 percent.Simulations show that a 10 percent tax increase that raisedcigarette prices by 4.9 percent would reduce consumption by3 percent, and increase tax revenues by 6.7 percent, ceterisparibus, including assuming no significant switching amongcigarette products with different prices and tax levels.