Analysis of Tobacco Taxation and Simulations in Mexico using LATINMOD

This Report was written by the Centro de Investigación en Alimentación y Desarrollo (CIAD) in Mexico. The Report estimates the impact of raising the specific component tax on cigarettes in two scenarios using the LATINMOD simulation platform. The first tax increase, adopted in January of 2020, updated the specific tax on cigarettes for inflation (to 0.49 pesos per stick) and the second scenario increases the specific component so that the total tax burden on cigarettes reaches the World Health Organization’s recommended 75 percent of the final retail price (to $1.35 pesos per stick). The Report presents the public health, revenue, and distributional impacts of these two scenarios and recommends the more ambitious tax increase as well as earmarking the additional revenues from the tax increase to food security programs in Mexico.

Two corresponding Policy Briefs can be found here and here.