Tobacco Excise Tax Can Be A Progressive Policy Tool

This Policy Brief was written by Development and Policies Research Center (DEPOCEN) in Vietnam. The policy brief focuses on the impact of increased tobacco taxes on various income groups, concluding that this can be a progressive policy tool. Low-income smokers are more responsive to price than higher-income smokers and spend a larger share of their budget on tobacco. The authors find, however, that the income effect on price sensitivity is more significant when there is less variability in the price of cigarettes. A specific excise tax on cigarettes would  decrease the large price differences that currently exist in Vietnam. The brief concludes with recommendations for future tax policies to reduce smoking prevalence and ensure taxation is progressive.