The Real Effect of the Czech Tax Policy for Combating the Tobacco Epidemic

Petr David, Marek Litzman and Petr Rozmahel
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Marek Litzman: Mendel University in Brno, Faculty of Business and Economics
Petr Rozmahel: Mendel University in Brno, Faculty of Business and Economics

Journal of Economics / Ekonomicky casopis, 2022, vol. 70, issue 7-8, 589-602

Abstract: Similar to other developed countries, the Czech Republic implements socio-economic policies aimed at minimizing smoking. The objective of this research is to provide evidence of the real impact of increasing cigarette taxes on cigarette consumption and its structure in the Czech Republic. The unique database consisting of manufacturers’ subscribed cigarette stamps and all posted brand prices were collected by the authors over the past two decades and was utilized in the analysis. The analysis shows that a continuous rise in cigarette market prices does not motivate consumers to prefer low price brands or to reduce cigarette consumption. The research provides evidence that smokers did not minimize smoking but even spent more money on cigarettes, preferring more expensive brands or staying loyal to a favored one. This implies necessary changes in the market basket of the smokers’ households.

Keywords: cigarette consumption; consumer behaviour; price effects; tax policy (search for similar items in EconPapers)
JEL-codes: H22 I18 L66 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sav:journl:v:70:y:2022:i:7-8:p:589-602

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