The Aftermath of the Tobacco Tax Reform in Brazil (Policy Brief)

This Policy Brief was written by Universidade Católica Brasília (UCB) in Brazil. The policy brief assesses the impact of various selective tax (ST) scenarios on cigarette prices, consumption, tax revenues, and the tax burden to inform Brazil's current tax reform discussions. Specifically, the researchers find that a mixed tax structure with an ad valorem rate of 92% and a specific component of BRL 3.75 per pack would increase tax revenues by BRL 88 million per month, while decreasing consumption by 25%. Other specific and ad valorem combinations are possible to achieve similar results and ensure that no federal state experiences a decrease in tax revenue. The policy brief concludes with recommendations for policy makers to carefully select the selective tax to ensure that it is effective in raising prices and, thus, reducing consumption, while increasing revenues.

A corresponding Working Paper can be found here. 

A Tobacco Tax Simulator, which allows users to simulate tax reform scenarios, can be found here.