Relationship between tobacco tax and price and global evidence

Taxes on tobacco products are often a significant component of the prices paid by consumers of these products, adding over and above the production and distribution costs and the profits made by those engaged in tobacco product manufacturing and distribution. The relationship between tax and price is complex. Even though tax increase is meant to raise the price of the product, it may not necessarily be fully passed into price increase due to interference by the industry driven by their profit motive. The industry is able to control the price to certain extent by maneuvering the producer price and also the trade margin through transfer pricing.

This presentation is devoted to the structure of taxes on tobacco products, in particular of excise taxes.

 

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WHO