On the Analysis of Tobacco Tax Reforms in Argentina

This Report was written by Centro de Estudios, Distributivos, Laborales y Sociales (CEDLAS) in Argentina. The report analyzes the impact of tobacco tax reforms on consumption and tax revenues. Increasing the ad valorem tax from 70% to 75% would increase cigarette prices by 18.3%. This would reduce consumption by 11.3%, while increasing total tax collection by 9.8%. This scenario is relevant as the Ministry of Finance has the statutory power to implement this increase. Alternatively, the authors estimate the impact of establishing a specific tax of $99.37 per pack combined with ad valorem components. For example, implementing the specific tax in addition to a 20% ad valorem rate would reduce consumption by 25.8%, and increase revenue collection by 14.5%. The authors conclude with recommendations for policy makers to pursue these tobacco tax reforms and effectively raise tax revenues. 

A Policy Brief based on the report can be found here.