Abstract
—The majority of Armenian adult males smoke, yet tobacco taxes in Armenia are among the lowest in Europe and Central Asia. Increasing taxes on tobacco is one of the most cost-effective public health interventions, but many opponents often cite regressivity as an argument against tobacco taxation. We use a mixed-methods approach to study the potential regressivity of tobacco taxation and the extent to which the regressivity argument hindered increases in tobacco taxation in Armenia. First, we pursued an extended cost-effectiveness analysis (ECEA) to assess the health, financial, and distributional consequences (by consumption quintile) of increases in the excise tax on cigarettes in Armenia. We simulated a hypothetical price hike leading to a tax rate of about 75% of the retail price of cigarettes, which would be fully passed on to consumers. Second, we conducted a series of stakeholder interviews to examine the importance of the regressivity argument and identify the factors that allowed tobacco tax increases to be adopted as public policy in Armenia. We show that increased excise taxes would bring large health and financial benefits to Armenian households. Half of tobacco-related premature deaths and 27% of associated poverty cases averted would be concentrated among the bottom 40% of the population. Though regressivity was raised as a concern at the initial stages of the policy adoption process, our qualitative stakeholder analysis indicates that the recent accession to the Eurasian Economic Union and the fiscal constraints faced by the government created a window of opportunity for tobacco taxation to be placed on the policy agenda and adopted as government policy, and the ECEA findings were an important input into the process.
Highlights
In Armenia, smoking prevalence is high and tobacco use is one of the leading risk factors for premature mortality.[1]Postolovska et al.: Distributional Impact of Increased Tobacco Taxes in Armenia 31About 25% of Armenian adults smoke, largely the men (53% smoking prevalence among males versus 2% among females).[2]
Though regressivity was raised as a concern at the initial stages of the policy adoption process, our qualitative stakeholder analysis indicates that the recent accession to the Eurasian Economic Union and the fiscal constraints faced by the government created a window of opportunity for tobacco taxation to be placed on the policy agenda and adopted as government policy, and the effectiveness analysis (ECEA) findings were an important input into the process
Its results were used in Armenia’s policy dialogue, allowing us to conduct a series of interviews with key stakeholders to analyze the agenda setting and adoption processes of tobacco taxation and identify factors that enabled tobacco taxation to be adopted as public policy in 2015
Summary
In Armenia, smoking prevalence is high and tobacco use is one of the leading risk factors for premature mortality.[1]Postolovska et al.: Distributional Impact of Increased Tobacco Taxes in Armenia 31About 25% of Armenian adults smoke, largely the men (53% smoking prevalence among males versus 2% among females).[2]. In Armenia, smoking prevalence is high and tobacco use is one of the leading risk factors for premature mortality.[1]. Postolovska et al.: Distributional Impact of Increased Tobacco Taxes in Armenia 31. About 25% of Armenian adults smoke, largely the men (53% smoking prevalence among males versus 2% among females).[2] Smoking is higher among the poorer socioeconomic groups: it is high among men in the second and third wealth quintiles (60% prevalence) compared to the bottom (49%) and top (42%) quintiles.[3]. Higher prices can result in current smokers reducing cigarette consumption and preventing ex-smokers from returning to smoking.[6,7] Though tax hikes can generate additional revenue for financing for development, as stated in the 2015 Addis Ababa Action Agenda,[9] the main objective of tobacco taxes is to discourage smoking and avert its adverse health consequences
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