Researchers from the Vienna Institute of International Economic Research assessed the impact of the Ukrainian government's projects to increase excise taxes on tobacco products on the number of smokers in the coming years.
Points of attention
- Researchers from the Vienna Institute of International Economic Research predict a decrease in the number of smokers in Ukraine by 3.3% by 2026 and 8.4% by 2028 with the implementation of alternative draft law No. 11090-3.
- Increasing the excise tax on tobacco products in Ukraine could prevent the premature death of 165,000 Ukrainian citizens by 2028, as indicated by the Austrian scientists' study.
- The alternative draft law is deemed more beneficial, saving 65.9 billion hryvnias and preventing 41% more smoking-related deaths compared to the government draft.
- Swift and uniform tax increases on all tobacco products are highlighted as the best approach to maximize public health benefits and government revenue.
- By implementing the alternative bill, Ukraine can potentially reduce the burden on the health care system and preserve the working capacity of the population, ultimately fostering a healthier society and robust economy.
How government projects to increase excise taxes on tobacco products will affect the number of active smokers in Ukraine
It is noted that according to the first project of the Government of Ukraine No. 11090, which was approved by the Verkhovna Rada in the first reading on June 4, it is planned to increase the excise duty on cigarettes and cigars to 90 euros per 10,000 products by 2028.
At the same time, for tobacco products for electric heating — up to 72 euros.
Alternative project No. 11090-3 provides for an increase in the excise duty on cigarettes, cigarillos and TWEN to 120 euros per 1,000 pieces by 2028.
To evaluate the effectiveness of these draft laws, Austrian scientists created a model for simulating the excise tax on tobacco.
It is noted that if draft law No. 11090 is approved, the level of consumption of tobacco products in Ukraine should decrease by 3.3% by 2026.
At the same time, in the case of a lower excise tax on products for electric heating of tobacco, smokers in Ukraine will prefer these devices.
Scientists warn that at such a time Ukrainians will consume both cigarettes and TWEN at the same time.
This will lead to an increase in the number of smokers in Ukraine after 2026.
What is known about the effect of the adoption of both draft laws
According to Austrian researchers, the adoption of draft law No. 11090-3 may lead to a decrease in the number of smokers.
In this case, as scientists note, the number of smokers in Ukraine will decrease by 8.4% by 2028.
The created model also demonstrates that the government bill will prevent 65,000 deaths due to smoking of Ukrainian citizens until 2028.
Meanwhile, the alternative bill allows preventing the premature death of 165,000 Ukrainian citizens.
Every year, 130,000 Ukrainians die prematurely due to smoking in Ukraine, including from heart attack, stroke and cancer.
Also, according to researchers, draft law No. 11090-3 is capable of bringing more additional tax revenues to the state budget.
Austrian scientists draw attention to the fact that the alternative bill is at least 41% more profitable than the government's and will allow the country to save 65.9 billion hryvnias.
This model can have additional advantages, because reducing the number of smokers should partially reduce the burden on the health care system and preserve the working capacity of the population.