The working paper examines the macroeconomic impacts of tobacco tax increases in Serbia. The researchers simulate both a 25% and 43.6% specific excise tax increase, under six scenarios for the reallocation of the additional tax revenue collected. The results show that the net impact of increasing tobacco taxes is positive when output, income, and employment are considered as long as at least 80% of the additional revenue is reallocated. Further, dedicating a larger portion of this revenue towards health services, social work activities, and education is positively associated with the overall net impact on output, income, and employment.
Macroeconomic Impacts of Tobacco Taxation in Serbia - download here