Improving Tobacco Tax Policy in the Republic of Macedonia

Macedonia ranks among the top ten countries worldwide based on smoking prevalence and the average number of cigarettes smoked per smoker. Data from the Ministry of Finance shows an increasing trend in excise revenues from 2000-2017. Revenues have more than doubled since 2010. With an estimated share of 3%, Macedonia is positioned among the eight major tobacco-producing countries of the world. However, even with subsidies from the Government, tobacco production has declined over the past years, which is in line with international trends. The land under tobacco currently occupies 3.4% of total arable land and over 70% of the total area planted with indus¬trial crops2. The Republic of Macedonia is one of the 168 countries in the world that have ratified the World Health Organization Framework Convention on Tobacco Control (WHO FCTC).

This research by Analytica-one of the first such studies in Macedonia—studied the price elasticity and other key determinants of demand for tobacco products. The study evaluated to what extent demand for tobacco, specifically cigarettes, could be controlled by price and other policy measures. The findings of this research study show that increasing the existing tobacco tax by 50%could reduce consumption of tobacco products by 19.2%, while increasing tobacco tax revenues by around EUR 100 million.

A corresponding Report can be found here.