Tobacco tax reform can have varying implications for different groups, depending on their income level. Therefore, it is important to examine its potential impact on poverty and inequality to provide evidence for policymaking. The main finding of this study indicates that an increase in tobacco taxation in Serbia is progressive but may lead to a small increase in poverty if additional tax revenues are not used to subsidize goods that represent high shares in the total consumption of lower-income households. A key policy recommendation is to raise tobacco taxation by designing a revenue-neutral tobacco taxation policy, whereby additional revenues from higher tobacco excises would be allocated to subsidize goods and services whose higher consumption would improve the overall well-being of society, such as food, education, or health care.
Impacts of Tobacco Taxation on Poverty and Inequality in Serbia (2023) - download here