Moral dilemma in deciding on the amount of excise tax on tobacco products in the Czech Republic

Abstract

The goal of the paper is to identify the relationship between the amount of excise tax (ET) on tobacco products in the Czech Republic and the collection of excise tax on tobacco products into the state budget of the Czech Republic between 2013 and 2021. The development of the tax rate and the method of determining the amount of excise tax on tobacco products in the CR is illustrated using the comparison method. The relationship between the revenue for the state budget from tobacco products and the amount of excise tax on tobacco products in the CR is expressed using a regression model. Development trends of illegal tobacco products in the territory of the CR are represented using time series regression. The net revenues from the excise tax on tobacco products are calculated using the difference-indifference method. The amount of costs incurred by the state associated with smoking is defined based on an in-depth analysis of literary resources on the Web of Science portal, where a calculation based on a percentage share of the GDP is used. The results indicate that the excise tax rates in individual years show a growing trend except for one year where there was no change in the excise tax rate. On the other hand, the results show that an increased excise tax does not automatically result in higher revenue for the state budget. Other factors influence the collection of the excise tax on tobacco products, such as illicit trade in tobacco products. It is possible to use other research methods and data sources to determine the development of illegal trade in tobacco products to calculate the amount of smoking-related costs to the state.