Improving Tobacco Tax Policies in the Republic of Serbia
By ratifying the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) in 2005, the Republic of Serbia has recognized the role of tobacco taxes in reducing the health, social, environmental and economic consequences of tobacco consumption. Research has shown that raising tobacco prices through increased tobacco taxes can reduce tobacco consumption.
The research findings indicate that the price elasticity of demand for tobacco products in low and middle-income countries ranges between -0.2 and -0.8.2 In other words, a 10% increase in tobacco prices in low and middle-income countries would decrease tobacco consumption between 2-8%. Similarly, a 50% increase in tobacco prices would result in reducing tobacco consumption between 10% and 40%. tobacco resulting from higher taxes would have a positive impact both on the health of the nation and the health of public finances.
Research conducted by the Institute of Economic Sciences (IES) in Serbia showed that a 10% increase in tobacco prices would reduce demand between 4.5 and 7.6% and also raise revenues. This is based on the price elasticity of demand between -0.45 and -0.76, depending on the research methodology.
A corresponding Report can be found here.
Content Type: Policy Brief
Authors(s): Jovan Zubović, Ph.D., Isidora Ljumović, Olivera Jovanović, Duško Bodroža, Ivana Domazet