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Economic Effects of Changes in the Excise Tax on Tobacco Products in Poland

Author

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  • Hryszko Krzysztof

    (MSc, Institute of Agricultural and Food Economics National Research Institute, Department of Agricultural Markets and Quantitative Methods; ul. Świętokrzyska 20, 00-002 Warsaw, Poland)

  • Szajner Piotr

    (PhD, Instiutute of Agricultural and Food Economics National Research Institute, Department of Agricultural Markets and Quantitative Methods; ul. Świętokrzyska 20, 00-002 Warsaw, Poland)

Abstract

The aim of the article is to assess the impact of changes in excise duty rates on prices, consumption, and tax revenue to the state budget on the development of the domestic tobacco industry. The study was conducted, among other things, using methods of statistical comparative analysis, dynamics of the main elements of the market, exponential regression analysis, and analysis of selected financial ratios. The research shows that between 2010 and 2021 the tobacco industry in Poland developed very dynamically due to foreign direct investments and competitiveness on the EU market. Fiscal policy determined prices of tobacco products, as indirect taxes dominated the structure of retail prices. The increasing rates of excise duty resulted in a decrease in cigarette consumption, which was compensated by an increase in the consumption of innovative products. The effectiveness of fiscal policy is also confirmed by the growing budget revenues and reducing the shadow economy in the internal market. In recent years, however, consumer income has been growing faster than the prices of tobacco products, which has resulted in their better affordability. In conclusion, between 2022 and 2027, excise tax rates will gradually increase due to the harmonization of the national tax law with the regulations in force in the European Union. The increase in excise duty rates will determine the production and sale of tobacco products, which will adapt to demand conditions. Higher rates of excise tax will result in an increase in the prices of tobacco products and state budget revenues from indirect taxes.

Suggested Citation

  • Hryszko Krzysztof & Szajner Piotr, 2023. "Economic Effects of Changes in the Excise Tax on Tobacco Products in Poland," Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics, Sciendo, vol. 375(2), pages 22-50, June.
    • Handle: RePEc:vrs:zerpae:v:375:y:2023:i:2:p:22-50:n:3
    DOI: 10.30858/zer/167032
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
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    More about this item

    Keywords

    tobacco; tobacco products; indirect taxes; excise tax; market regulations; prices;
    All these keywords.

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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