Roundtable “The effectiveness of tax policy changes in Montenegro – smoking behavior by socioeconomic status”

Venue: Centre Ville Hotel, Podgorica    

Date: 2.12.2019

Institute for Socio-Economic Analysis held the second round table regarding the issue related to acceleration of tobacco taxation policy in Montenegro. The aim of the research in this year was to focus not only on the consumption sensitivity to cigarettes price changes, but as well to estimate the prevalence elasticity, according to the Household Budget Survey data. Moreover, the analysis was conducted by income groups, in order to asses smoking behavior of households by socioeconomic status.

The participants of the round table are representing the most important stakeholders in this area of research, based on their impact on policy decision-making: Ministry of Finance (Directorate for Tax and Custom System), Ministry of Health (Directorate for international cooperation and regulatory harmonization), Institute for Public Health (Center for Health promotion), as well as Statistical office – Monstat and NGO sector (Montenegrin Society for the Fight Against Cancer, Red Cross of Montenegro).

First session was dedicated to the presentation of the research main results. The ISEA findings showed that poor households are much more sensitive to price changes, which is especially important in the context of poverty and growing disparities in health. Moreover, taking into account the overall high prevalence, specifically in the low-income group, it was suggested for policy makers to apply both evidence-based price and non-price policies.

Increases in cigarette taxes, especially through a specific tax would, according to ISEA simulation, significantly decrease cigarette consumption, while increasing public revenues. In that manner, initiation would be reduced, while stimulating cessation. The effects would be mostly pronounced in low- and middle-income households.

The discussion led to the conclusion that progressive increase in excise taxes would lead to decrease in prevalence and consumption, aligned with strengthening stakeholder’s cooperation. This would contribute to more effective implementation of tobacco taxation policy and control.