March 7, 2019

Research Makes the Case for Increased Tobacco Taxes in Pakistan and Southeastern Europe

New research from Pakistan- and Southeastern Europe-based think tanks find that tobacco taxation increases can reduce tobacco consumption and at the same time increase government revenues in the regions.

In Pakistan, research results from the Pakistan Institute of Development Economics (PIDE) and the Social Policy and Development Centre (SPDC) recommend a simplified tax structure that has only two tiers of taxation, instead of the three tiers currently used in the country. Along with restoring tax levels to 2016 rates, this simplification would result in an estimated 3 million fewer smokers and 1.1 million fewer premature deaths and generate an estimated Rs 91.2 billion in new government revenues.

PIDE and SPDC were supported by grants to the University of Illinois at Chicago (UIC) to conduct economic research on the impact of tobacco taxes in Pakistan. UIC is a partner of the Bloomberg Initiative to Reduce Tobacco Use.

Similar results were also obtained by the Tobacco Tax Research Consortium, a group of seven think tanks led by the Institute of Economic Sciences, in Southeastern Europe, also supported by grants to UIC. The results from the research on consumer responses to changes in price of tobacco products and impacts on government revenues from tobacco tax increases show that an increase in excise tax reduced the quantity demanded for tobacco products and increased governmental revenues for all countries studied, which include: Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro, and Serbia.

UIC principal investigator Frank Chaloupka, professor of economics and director of the Health Policy Center, notes “this ground-breaking research highlights the need for evidence-based tobacco taxation policies throughout the Southeastern European region and in the country of Pakistan.”

The research was presented at recent conferences with policy makers and media participants. The full reports are here:

Pakistan

Southeastern Europe

Albania

Bosnia and Herzegovina

Croatia

Kosovo

Macedonia

Montenegro

Serbia