RESUMO
BACKGROUND: The main goal of this study is to estimate the crowding out impact of tobacco expenditures on the household budget allocation to other mutually exclusive commodity groups in Montenegro. METHODOLOGY: The analysis uses the Household Budget Survey data from 2005 to 2017 to estimate a system of Engel curves using a three-stage least squares approach. As the tobacco expenditure variable is endogenous to budget shares on other consumption items, instrumental variables were included to obtain consistent estimates. RESULTS: Overall, the results confirm the existence of the crowding out effect of tobacco spending on various commodities, such as some food items (eg, cereals, fruits and vegetables and dairy products), clothing, housing and utilities, education and recreation while a positive effect of tobacco consumption was estimated on budget shares on bars and restaurants, alcohol, coffee and sugary drinks. These results are consistent throughout the income groups of households. The estimates indicate that an increase in tobacco expenditures leads to reduction in budget shares on essential goods, which is likely to have negative impacts on the household living standard. CONCLUSIONS: Tobacco expenditure crowds out household spending on necessities, especially in case of the poorest households, thus increasing inequality, hampering human capital development and potentially causing long-term adverse effects on the households in Montenegro. Our results are similar to evidence from other low and middle-income countries. This paper contributes to the analysis of the crowding out effect of tobacco consumption, which was conducted for the first time in Montenegro.
RESUMO
BACKGROUND: A significant tobacco tax increase has long been advocated to reduce Indonesia's high smoking prevalence. However, implementing such a policy remains challenging due to the tobacco industry's argument that it would negatively impact the economy. OBJECTIVE: This study aims to provide a comprehensive estimate of the net impact of tobacco taxation on Indonesia's economy. METHOD: The impact of the tax hike on the economy is simulated through a change in cigarette demand and reallocation of household's budget and allocation government spending from additional tobacco tax revenue. Input-output analysis is employed to estimate the net effect of the tobacco tax rise on the total economic output, income and employment in Indonesia. FINDING: Increasing the tobacco tax would generate a net positive impact on the economy as it would increase economic output, household income and employment. The positive impact is mainly driven by government spending from additional revenue from increased tobacco taxes. Spending tax revenue using the current structure of government spending has the potential to generate the optimal economic effect. Increasing tobacco tax by 45% from the 2019 tax level would increase economic output, household income and employment by Rp84.2 trillion, Rp24.1 trillion and 400.3 thousand jobs, respectively.
RESUMO
BACKGROUND: Cigarette use is one of the major risk factors for non-communicable diseases in Bosnia and Herzegovina, with 41.1% of adults being current smokers in 2019 and almost half of current smokers using more than 20 cigarettes per day. METHODS: This study applies the prevalence-based, cost-of-illness approach to estimate the annual economic cost of smoking in Bosnia and Herzegovina in 2019. RESULTS: The study estimates that cigarette use by adults in Bosnia and Herzegovina caused between 24.4% and 42.8% of all deaths in 2019 and a total economic cost of between 367.5 and 635.1 million (2.0%-3.5% of gross domestic product). The direct costs represent the largest share of the total cost (between 1.0% and 1.7% of gross domestic product). CONCLUSION: Cigarette use imposes a significant health and economic burden in the society of Bosnia and Herzegovina. Various tobacco control measures can be implemented to prevent and reduce tobacco consumption and the negative health consequences of tobacco use. Numerous studies have shown taxes on tobacco products are very effective in reducing tobacco use, especially among certain demographic groups, such as youth and low-income individuals. Smoke-free laws have also shown benefits. Other policy measures that can be implemented include restrictions to advertising, limitations on who can purchase tobacco products, how and where they can be purchased, etc. In addition, governments could also implement various education programmes on the negative health consequences of smoking. The results of this study provide information that calls for prompt and strengthened implementation of tobacco control measures to reduce cigarette consumption in the country and improve the health outcomes and productivity of its inhabitants.
