The Aftermath of the Tobacco Tax Reform in Brazil [Working Paper Series]

This Working Paper was written by Universidade Católica Brasília (UCB) in Brazil. The working paper 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 working paper 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 Policy Brief based on this working paper can be found here. 

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