Abstract
Abstract
[Objectives] To estimate the economic impact on overall revenue of the tobacco tax increase that is due to be implemented on January 1,2009, using a conservative estimation.
[Methods] Given, the difficulty of applying the price elasticity of tobacco demand to a large tax increase (from JPY 100 to JPY 700), we conducted an overall, analysis based on the conjoint analysis of Goto et al in 2007, in which it was estimated how many smokers think of quitting smoking for a given tobacco price increase. Success rates for quitters were derived from a fact-finding survey by the Central Medical Council in Japan for the short-term (less than 1 year). For long-term analysis, we also applied the effects of a tobacco demand decrease due to issues other than price, based on domestic research.
Additional, we also considered the re-smoking rate to the quitting rate. We also used foreign data when no do mestic data were available. Sensitivity analyses were conducted for i) short-term success rate, ii)long-term success rate,and iii) calibration for young smokers, who are more sensitive to a tax increase.
[Results] Analysis of the base situation showed that if the tax increase is implemented on January 1,2009, the total amount of tobacco tax collected will reach a peak in 2009 or 2010.If the price per pack is changed from JPY 300 to JPY 500 or JPY 1,000, the largest amount of tobacco tax collected would be JPY 2.38 trillion (USD 21.6 bil., USD 1=JPY 110) and JPY 3.06 trill(USD 27.8 bil.), respectively.Compared to the estimation without a tax increase, the total amount of additional, tobacco tax collected would be JPY 440 bil. (USD 4.0 bil) and JPY 1.28 tril. (USD 11.6 bil.),respectively. The robustness of the results was shown in various sensitivity analyses.
[Conclusion] A tobacco tax increase will result in a rise in the total amount of tobacco tax collected.
