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Using a Natural Experiment to Examine Tobacco Tax Regressivity

Author

Listed:
  • Adel Bosch

    (Department of Economics, University of Pretoria)

  • Steven F. Koch

    (Department of Economics, University of Pretoria)

Abstract

We take advantage of a tobacco tax hike that occurred during the collection of the South African Income and Expenditure Survey to examine the regressivity of tobacco taxes. We are also able to examine the relative change in regressivity following the tax increase. Like previous research into commodity taxes, we find that tobacco taxes are regressive. However, we find that tobacco tax increases reduce the tax burden at the lower end of the income distribution, such that after the cigarette tax increase, cigarette taxes are less regressive than before the increase.

Suggested Citation

  • Adel Bosch & Steven F. Koch, 2014. "Using a Natural Experiment to Examine Tobacco Tax Regressivity," Working Papers 201424, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201424
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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