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Distributional health and financial consequences of increased cigarette tax in Iran: extended cost-effectiveness analysis

Author

Listed:
  • Behzad Raei

    (Tehran University of Medical Sciences)

  • Sara Emamgholipour

    (Tehran University of Medical Sciences)

  • Amirhossein Takian

    (Tehran University of Medical Sciences
    Tehran University of Medical Sciences)

  • Mehdi Yaseri

    (Tehran University of Medical Sciences)

  • Ghahreman Abdoli

    (University of Tehran)

  • Ahad Alizadeh

    (Qazvin University of Medical Sciences)

Abstract

Background To assess the potential impact of a tax-induced cigarette price increase on financial and health outcomes by different socioeconomic groups. Methods In a modeled condition using pooled cross-section data from Household Income and Expenditure Survey (2002–2017) and Iran 2019 population data, a methodology of an extended cost effectiveness analysis (ECEA) was applied to model the impact on cigarette consumption of hypothetically increased cigarette tax. The methodology was employed to evaluate: [1] health benefits (premature deaths averted); [2] health expenditures regarding smoking-related disease treatment averted; [3] additional tax revenues raised; [4] change in household expenditures on cigarettes; and [5] financial risk protection among male Iranian smokers in a time span of 60 years following a one-time increase in cigarette price of 75%. The Stata version 15.1 (StataCorp., College Station, TX, USA) was used to perform the relevant analysis and estimate regression models. Results A 75% increase in cigarettes price through taxation would reduce the number of smokers by more than half a million, 11% of them in the poorest quintile; save about 1.9 million years of life (11% of which would be gained in the lowest quintile compared to 20% in the highest one); eliminate a total of US$196.4 million of health expenditures (9% of which would benefit the bottom quintile). Such a policy could raise the additional annual tax revenues by roughly US$ 1 billion, where the top two quintiles bear around 46% of the total tax burden. We estimated that the tax increase would avert an estimated 56,287 cases of catastrophic expenditure that wholly concentrated among the bottom two expenditure quintiles. Conclusion Increasing cigarette tax can provide health and financial benefits, and would be pro-poor in terms of health gains, Out-of-Pocket (OOP) savings, and financial risk protection against smoking-related diseases.

Suggested Citation

  • Behzad Raei & Sara Emamgholipour & Amirhossein Takian & Mehdi Yaseri & Ghahreman Abdoli & Ahad Alizadeh, 2021. "Distributional health and financial consequences of increased cigarette tax in Iran: extended cost-effectiveness analysis," Health Economics Review, Springer, vol. 11(1), pages 1-10, December.
    • Handle: RePEc:spr:hecrev:v:11:y:2021:i:1:d:10.1186_s13561-021-00328-w
    DOI: 10.1186/s13561-021-00328-w
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    References listed on IDEAS

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    1. World Health Organization, 2019. "WHO report on the global tobacco epidemic 2019: Offer help to quit tobacco use," University of California at San Francisco, Center for Tobacco Control Research and Education qt1g16k8b9, Center for Tobacco Control Research and Education, UC San Francisco.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    3. World Health Organization, 2015. "WHO report on the global tobacco epidemic, 2015: Raising taxes on tobacco," University of California at San Francisco, Center for Tobacco Control Research and Education qt1fh1f32m, Center for Tobacco Control Research and Education, UC San Francisco.
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