Tobacco Economic of Indonesia: Poor Households' Spending Pattern, Tax Regressivity and Economic Wide Impact of Cigarette Excise Tax Simplification

Rus'an Nasrudin, Ledi Trialdi, Djoni Hartono and Abdillah Ahsan
Additional contact information
Ledi Trialdi: Department of Economics, Faculty of Economics, University of Indonesia
Abdillah Ahsan: The Demographic Institute, Faculty of Economics, University of Indonesia

No 201302, Working Papers in Economics and Business from Faculty of Economics and Business, University of Indonesia

Abstract: Policy to reduce cigarette consumption is needed because of the harm to both smokers and the surrounding healthy. In narrow sense, the harm of cigarette consumption for poor households needs to be taken into account into policy consideration as it expected to sacrifies essential spending for the poor. In general, any policy related to any influential sector in the economy, including tobacco sector, needs an economic wide impact consideration. This study aims to justify the policy on three grounds: analysis on poor household with smoker in terms of their spending pattern, an assessment of the cigarette excise tax burden's regressivity and and economic wide impact analysis of a cigarette excise tax simplification. This study find that there is tendency of lower spending on essential good (health and food) of poor household with smoker than without smoker. Secondly, indeed, the tax burden of Indonesia's excise tax is regressive so that it put burden more to the poor than the richer. Lastly, a cigarette tax increase will reduce national output with considerably small impact but moderately increase government revenue to boost the economy through infrastructure spending as the optimum opt.

Keywords: Cigarette; Consumption Pattern; Excise Tax; Regressivity; Computable General Equilibrium (search for similar items in EconPapers)
JEL-codes: D58 I18 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2013-03, Revised 2013-03
New Economics Papers: this item is included in nep-hea and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://econ.feb.ui.ac.id/uploads/201302.pdf First version, 2012 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to econ.feb.ui.ac.id:443 (Bad file descriptor) (http://econ.feb.ui.ac.id/uploads/201302.pdf [301 Moved Permanently]--> https://econ.feb.ui.ac.id/uploads/201302.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lpe:wpecbs:201302

Access Statistics for this paper

More papers in Working Papers in Economics and Business from Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Halley Yudhistira ( this e-mail address is bad, please contact ).