Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation
This paper analyzes the welfare and distributional impacts of increasing taxes on cigarettes in Georgia. Increasing taxes on tobacco is an effective measure to reduce smoking. According to some estimates, increasing tobacco taxes could save more th...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/752631580310103282/Taxing-Tobacco-in-Georgia-Welfare-and-Distributional-Gains-of-Smoking-Cessation http://hdl.handle.net/10986/33266 |
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okr-10986-332662022-09-20T00:13:30Z Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation Fuchs Tarlovsky, Alan Gonzalez Icaza, Maria Fernanda TOBACCO TAX TOBACCO CONTROL DISTRIBUTIONAL IMPACT WELFARE EFFECTS CIGARETTE TAX COST-BENEFIT ANALYSIS MORTALITY HEALTH CARE COST INEQUALITY This paper analyzes the welfare and distributional impacts of increasing taxes on cigarettes in Georgia. Increasing taxes on tobacco is an effective measure to reduce smoking. According to some estimates, increasing tobacco taxes could save more than GEL 3.6 billion and 53 thousand lives over a 15-year period. However, concerns over potentially regressive effects on the poor are often raised. An Extended Cost Benefit Analysis (ECBA) is applied to simulate the welfare and distributional impacts of raising prices on cigarettes. Decile-specific price elasticities of demand are estimated to account for heterogenous behavioral responses of different income groups. Empirical estimations confirm that poorer households in Georgia tend to reduce consumption more intensely when faced with higher tobacco prices. The estimated magnitude and distribution of elasticities are comparable to peer countries. The simulations based on household survey data suggest that the long-term net distributional effects of increasing taxes on cigarettes in Georgia are likely progressive. Incorporating the indirect benefits of reduced smoking -- reductions in medical expenses and earnings from adverted premature deaths -- could bring small, albeit positive, income gains for large sectors of the population. The magnitude of those benefits is most significant among lower-income households, potentially contributing to lift them out of poverty. 2020-01-30T20:47:44Z 2020-01-30T20:47:44Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/752631580310103282/Taxing-Tobacco-in-Georgia-Welfare-and-Distributional-Gains-of-Smoking-Cessation http://hdl.handle.net/10986/33266 English Policy Research Working Paper;No. 9130 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Georgia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
TOBACCO TAX TOBACCO CONTROL DISTRIBUTIONAL IMPACT WELFARE EFFECTS CIGARETTE TAX COST-BENEFIT ANALYSIS MORTALITY HEALTH CARE COST INEQUALITY |
| spellingShingle |
TOBACCO TAX TOBACCO CONTROL DISTRIBUTIONAL IMPACT WELFARE EFFECTS CIGARETTE TAX COST-BENEFIT ANALYSIS MORTALITY HEALTH CARE COST INEQUALITY Fuchs Tarlovsky, Alan Gonzalez Icaza, Maria Fernanda Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| geographic_facet |
Europe and Central Asia Georgia |
| relation |
Policy Research Working Paper;No. 9130 |
| description |
This paper analyzes the welfare and
distributional impacts of increasing taxes on cigarettes in
Georgia. Increasing taxes on tobacco is an effective measure
to reduce smoking. According to some estimates, increasing
tobacco taxes could save more than GEL 3.6 billion and 53
thousand lives over a 15-year period. However, concerns over
potentially regressive effects on the poor are often raised.
An Extended Cost Benefit Analysis (ECBA) is applied to
simulate the welfare and distributional impacts of raising
prices on cigarettes. Decile-specific price elasticities of
demand are estimated to account for heterogenous behavioral
responses of different income groups. Empirical estimations
confirm that poorer households in Georgia tend to reduce
consumption more intensely when faced with higher tobacco
prices. The estimated magnitude and distribution of
elasticities are comparable to peer countries. The
simulations based on household survey data suggest that the
long-term net distributional effects of increasing taxes on
cigarettes in Georgia are likely progressive. Incorporating
the indirect benefits of reduced smoking -- reductions in
medical expenses and earnings from adverted premature deaths
-- could bring small, albeit positive, income gains for
large sectors of the population. The magnitude of those
benefits is most significant among lower-income households,
potentially contributing to lift them out of poverty. |
| format |
Working Paper |
| author |
Fuchs Tarlovsky, Alan Gonzalez Icaza, Maria Fernanda |
| author_facet |
Fuchs Tarlovsky, Alan Gonzalez Icaza, Maria Fernanda |
| author_sort |
Fuchs Tarlovsky, Alan |
| title |
Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| title_short |
Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| title_full |
Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| title_fullStr |
Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| title_full_unstemmed |
Taxing Tobacco in Georgia : Welfare and Distributional Gains of Smoking Cessation |
| title_sort |
taxing tobacco in georgia : welfare and distributional gains of smoking cessation |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/752631580310103282/Taxing-Tobacco-in-Georgia-Welfare-and-Distributional-Gains-of-Smoking-Cessation http://hdl.handle.net/10986/33266 |
| _version_ |
1764478354938920960 |