How the increase in tobacco taxes will affect Ukrainians: experts analyzed two draft laws
Experts believe that increasing the excise tax will help prevent tens of thousands of premature deaths
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Researchers believe that the government’s model of increasing the excise tax on tobacco products may lead to a resumption of the smoking epidemic in Ukraine after 2026.
In the course of work, scientists of the Vienna Institute of International Economic Research appreciated influence of the government project No. 11090, which was approved by the people’s elected officials on June 4 approved as a basis in the first reading, and an alternative one draft law No. 11090-3.
The first draft of the law proposes to increase the excise duty on cigarettes and cigars to 90 euros per 10,000 products by 2028, and on tobacco products for electric heating (TVEN) to 72 euros.
Instead, the second legislative initiative provides for a harmonized increase in the excise duty on cigarettes, cigars and TWEN to 120 euros per 1,000 pieces by 2028.
In the study, the researchers analyzed these approaches using the Tobacco Excise Tax Simulation Model (TETSiM).
The results showed that, subject to the adoption of draft law No. 11090, the level of tobacco consumption until 2026 will decrease by 3.3%.
At the same time, the advantage for TWEN will lead to the fact that Ukrainians will replace the bad habit of using cigarettes or cigarillos with products for electric heating.
According to experts’ forecasts, under this scenario, Ukrainians in some places will start using cigarettes and TVEN at the same time. As a result, after 2026, the epidemic of tobacco consumption among Ukrainians will begin to grow again.
However, according to scientists, the adoption of draft law No. 11090-3 can lead to a steady decrease in the number of smokers. According to the calculations of specialists of the Vienna Institute of International Economic Studies, under this scenario, by 2028, 8.4% fewer Ukrainians.
In addition, simulations have shown that the government’s approach will allow to save the lives of 65 thousand Ukrainians by 2028, while the alternative will help prevent 165 thousand premature deaths.
We will remind you that every year due to smoking in Ukraine, every year it is premature die 130 thousand Ukrainians, in particular 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. According to their calculations, the alternative model is more profitable by at least 41% or 1.53 billion euros (65.9 billion UAH).
Moreover, 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.
“It is clear that Scenario 2, which involves higher taxes, is more effective for public health and for tax revenues. Scenario 1 is less effective also because it proposes to create a tax gap between cigarettes and TWEN.
The models show that benefits can be maximized if tax increases occur quickly and equally across all tobacco products.”the scientists concluded.
We will remind, according to sociological data pollas of 2024 in Ukraine, 30% of the population uses tobacco or nicotine products, 24.5% of them smoke every day.
“Surveys show that the consumption of tobacco products in Ukraine actively decreased until 2017.
But after the appearance of aggressive advertising of tobacco products for heating, electronic cigarettes and nicotine products, their consumption in Ukraine has not decreased for 7 years.says the study.
At the same time, for data WHO, worldwide tobacco consumption is declining, but in Europe its prevalence is declining more slowly than in other regions.
