Using a Natural Experiment to Examine Tobacco Tax Regressivity

23 May 2014
Publication Type: Working Paper
Keyword: Regressivity
JEL Code: K32, L66

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.

Working paper 434
1 May 2014
Journal: Social Science & Medicine
1 January 2018