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Questioning the regressivity of tobacco taxes: a distributional accounting impact model of increased tobacco taxation
  1. Stéphane Verguet1,
  2. Patrick K A Kearns1,
  3. Vaughan W Rees2
  1. 1 Global Health and Population, Harvard T.H. Chan School of Public Health, Boston, Massachusetts, USA
  2. 2 Center for Global Tobacco Control, Department of Social and Behavioral Sciences, Harvard T.H. Chan School of Public Health, Boston, Massachusetts, USA
  1. Correspondence to Dr Stéphane Verguet, Department of Global Health and Population, Harvard T.H. Chan School of Public Health, Boston, MA 02115, USA; verguet{at}hsph.harvard.edu

Abstract

Background Tobacco taxes, as with other ‘sin taxes’, are generally regarded as a highly cost-effective mechanism to reduce consumption but are often considered by policymakers to be regressive, undermining efforts to fully implement them at levels recommended by the WHO due to concerns of fairness. We aim to demonstrate whether there are circumstances in which the impacts of additional tobacco taxes are not regressive, using a standard income-share accounting definition of tax burden.

Methods and findings We apply mathematical modelling and explore the hypothetical distributions in the net change in tobacco taxes and cigarette expenditures by income group, following an increase in tobacco taxation. The hypothetical distribution per income group of additional taxes and cigarette expenditures borne by individuals following tobacco tax hikes was calculated with respect to a selection of parameters including: the change in the retail price of cigarettes, the price elasticity of demand for tobacco, smoking prevalence, cigarette consumption and individual income. We determine the range of hypothetical parameter values for which increased tobacco taxation should not be considered to penalise the poorest income groups when examining marginal cigarette consumption expenditures and using an accounting definition of tax burden.

Conclusions Our findings question the doctrine that tobacco taxes are uniformly regressive from a standard income-share accounting view and point to the importance of the specific features of tax policy to shape a progressive approach to tobacco taxation: tobacco tax increases are less likely to be regressive when accompanied by a broad framework of demand-side measures that enhance the capacity of low-income smokers to quit tobacco use.

  • taxation
  • socioeconomic status
  • global health
  • disparities
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Footnotes

  • Presented at Earlier versions of this paper were presented during seminars at the Harvard T.H. Chan School of Public Health and the Centre for the Evaluation of Value and Risk in Health, Tufts Medical Centre, where we received valuable comments from seminar participants. We are indebted to three anonymous reviewers for constructive and helpful comments on an earlier version of the manuscript.

  • Contributors SV conceived and designed the study. SV conducted the analysis with inputs from VWR amd PKAK. SV wrote the first draft of the manuscript, which VWR and PKAK reviewed and edited.

  • Funding The authors have not declared a specific grant for this research from any funding agency in the public, commercial or not-for-profit sectors.

  • Competing interests None declared.

  • Patient consent for publication Not required.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data availability statement All data relevant to the study are included in the article or uploaded as supplementary information.

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