Background and objectiveTobacco tax evasion undermines the goal of tobacco taxes as a tobacco control measure to make tobacco products less affordable, increases the health risks for those who smoke and decreases the government revenue. This paper analyses the tobacco tax evasion in six Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The aim of this research is to estimate the size of the illicit market and identify the main determinants of tax evasion activities in the Southeastern European region.Data and methodsData from 2019 Survey on Tobacco Consumption in Southeastern Europe (STC-SEE) are used. STC-SEE provides uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country. Tax evasion is defined on the basis of available information on tax stamps, health warnings, price and the place of purchase, in accordance with the previous research on tax evasion. In order to estimate the determinants of illicit purchases we use binary choice model of tax evasion.ResultsThe study finds that 20.4% of all current smokers in WB countries evade taxes on tobacco products, with evasion being much more frequent for hand-rolled (HR) tobacco (86.7%) than for the manufactured cigarettes (MC) (8.6%). While HR is predominantly illicit in all six countries, MC evasion varies significantly, with evasion being significantly higher in Montenegro and Bosnia and Herzegovina. Results further suggest that tax evasion is higher in the statistical regions where institutional capacities to tackle illicit trade are lower, in municipalities bordering countries with high MC evasion, as well as among smokers with low income, women and elderly. We also provide evidence that higher tobacco taxes and prices do not increase illicit consumption.ConclusionThe findings from the research suggest that in order to decrease tax evasion, governments should put additional effort to strengthen institutional capacities to tackle illicit tobacco markets. Furthermore, improving regional coordination in development and implementation of tobacco control policies, including the prevention of illicit market, is essential in lowering evasion in all WB countries. Finally, WB countries should regulate and enforce excise tax stamp requirements on the HR tobacco market to a much higher degree.
BackgroundThe empirical evidence shows that tobacco consumption is strongly associated with its affordability. The nominal growth in tobacco prices imposed by taxation should exceed or at least keep pace with nominal income growth, ensuring that tobacco products become less affordable over time. No analysis covering affordability issues in the Southeastern European (SEE) region has been conducted prior to this research.ObjectivesThe study aims to examine trends in cigarette affordability in ten selected SEE countries over the period 2008–2019 and the impact of affordability on the consumption of cigarettes. On the policy side, it aims to support conducting of more effective evidence-based policy of tobacco taxation.MethodsThe relative income price of cigarettes and the tobacco affordability index are used as affordability measures. The panel regression was run to estimate the impact of affordability measures and other covariates on cigarette consumption.ResultsThe affordability of cigarettes in the selected SEE countries has decreased on average but showed different patterns over the observed period. A decline in affordability has been more dynamic in Western Balkan (non-EU members) countries and low-and-middle-income countries within the SEE region. Econometric estimation confirms affordability as the main determinant of tobacco consumption, indicating that a decline in affordability considerably reduces tobacco consumption.ConclusionsDespite the evidence, affordability is still widely ignored by SEE policymakers when designing national tobacco taxation policies. Policymakers should be aware of the risk that future increases in cigarette prices could lag behind real income growth, making tax policy less effective at reducing consumption. Reducing affordability should be the paramount consideration in designing effective tobacco taxation policies.
There are numerous dilemmas related to the meaning of common terms associated with modern economic sectors, and especially the ones concerning industry. Chemical industry is a typical example of a term which changes rapidly and qualitatively, exactly with the pace of changing of the very technology based on knowledge, procedure, processes, raw materials, energy, as well as on the products themselves and on the way of their use. Numerous difficulties caused by huge changes in global market, by transition of command economies towards market system, as well as by the latest global economic-financial crisis, have brought the chemical industry in modern Serbia to an unenviable position. We cannot generally claim that chemical industry is collapsing, but the recovery of the whole chemical industry, as well as of the industry in general, necessitates many favourable presumptions from the environment, as well as strategic, systemic and operative measures, of the state within the so-called industry policy, as well as of the very companies which deal with chemical industry. The re-industrialization strategy, adopted officially during the first crisis blow, but to the full extent only during the prolonged crisis period in Serbia (2009-2013) should not be based on direct state incentives, but above all on the institutional infrastructure and business environment improvement which will lead to the investments in technological reconstruction and re-organization of the entire sector. However, chemical industry cannot be observed as a chance for economic growth per se, nor it can lead to higher employment rate in such a short period of time, but above all to productive use of profession, or of growth potential based on knowledge factor. This is why a proper evolution and prosperity of the Serbian chemical industry can be comprehended, not only through contribution of one separate sector, but as complementary and useful technologies within many other industries such as food, construction, energy, and many others, from the medium technologies domain, as well as those from the high technologies domain, such as bio-medical, pharmaceutical or cosmetic technologies. In such manner, the participation of chemical industry in the re-industrialisation of Serbia should not be observed only as a contribution to the recovery of industry, but as a factor of sustainable development in all its components, economic, social and ecological.
Background and objectiveNumerous studies have indicated that tobacco taxation is one of the most important policies to reduce tobacco consumption. However, its effectiveness crucially depends on consumer responses to price increases, that is, tobacco price elasticities. This paper analyses tobacco price elasticity in six Western Balkan countries.Data and methodsWe estimate own-price and cross-price elasticities of manufactured cigarettes (MCs) and roll-your-own (RYO) tobacco by using the methodological framework of the two-part model, regional variation in prices and 2019 Survey on Tobacco Consumption in Southeastern European countries (STC-SEE). STC-SEE provides a uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country.ResultsResults suggest that higher prices of MCs are associated with lower prevalence of MC use, while higher prices of RYO are associated with lower intensity of RYO use. Furthermore, regions with higher MC prices have a higher likelihood of using RYO over MC, suggesting that RYO is used as a cheaper alternative to MC. Lastly, lower smoking prevalence and intensity are associated with more smoking restrictions and support for tobacco price increases.ConclusionResults suggest that, aiming to decrease smoking prevalence and intensity, governments should increase excises on all tobacco products. Since RYO is a cheaper alternative to MC, the increase of excises on RYO should be higher, so that after excise increase, the prices of the two products are approximately the same. To further reduce tobacco consumption, governments should combine increasing taxes on tobacco products with non-price measures, such as stricter smoking restrictions and smoke-free regulations.
External debt accumulation is a common feature of transition economies
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