Cigarette Tax Revenues and Tobacco Control in Japan

Junmin Wan ()

No 04-11-Rev, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: The hypotheses of non-addiction, myopia and rational addiction are tested using annual, quarterly and monthly data. Changes in the prices of Japanese cigarettes can be viewed as exogenous from the point of view of consumer behavior, because the Japanese government controls cigarette prices. The empirical results of this paper support the addiction hypothesis. The short-run and long-run price elasticities range from -0.338 to -0.421, and from -0.679 to -0.686, respectively; thus, increases in tax revenues in the long-run are likely to be smaller than those in the short-run. As a result, tax increases would be an effective means of curbing smoking and reducing its social cost. Furthermore, the debt compensation programs for the Japan Railway and the National Forestry will not go according to plan, unless revenues are increased in the future.

Keywords: smoking; rational addiction; tax revenues (search for similar items in EconPapers)
JEL-codes: D12 E21 H29 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-06, Revised 2006-02
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Forthcoming in Applied Economics

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