IDEAS home Printed from https://ideas.repec.org/p/lpe/wpecbs/201302.html
   My bibliography  Save this paper

Tobacco Economic of Indonesia: Poor Households' Spending Pattern, Tax Regressivity and Economic Wide Impact of Cigarette Excise Tax Simplification

Author

Listed:
  • Rus'an Nasrudin

    (Department of Economics, Faculty of Economics, University of Indonesia)

  • Ledi Trialdi

    (Department of Economics, Faculty of Economics, University of Indonesia)

  • Djoni Hartono

    (Graduate Program in Economics, Faculty of Economics, University of Indonesia)

  • Abdillah Ahsan

    (The Demographic Institute, Faculty of Economics, University of Indonesia)

Abstract

Policy to reduce cigarette consumption is needed because of the harm to both smokers and the surrounding healthy. In narrow sense, the harm of cigarette consumption for poor households needs to be taken into account into policy consideration as it expected to sacrifies essential spending for the poor. In general, any policy related to any influential sector in the economy, including tobacco sector, needs an economic wide impact consideration. This study aims to justify the policy on three grounds: analysis on poor household with smoker in terms of their spending pattern, an assessment of the cigarette excise tax burden's regressivity and and economic wide impact analysis of a cigarette excise tax simplification. This study find that there is tendency of lower spending on essential good (health and food) of poor household with smoker than without smoker. Secondly, indeed, the tax burden of Indonesia's excise tax is regressive so that it put burden more to the poor than the richer. Lastly, a cigarette tax increase will reduce national output with considerably small impact but moderately increase government revenue to boost the economy through infrastructure spending as the optimum opt.

Suggested Citation

  • Rus'an Nasrudin & Ledi Trialdi & Djoni Hartono & Abdillah Ahsan, 2013. "Tobacco Economic of Indonesia: Poor Households' Spending Pattern, Tax Regressivity and Economic Wide Impact of Cigarette Excise Tax Simplification," Working Papers in Economics and Business 201302, Faculty of Economics and Business, University of Indonesia, revised Mar 2013.
  • Handle: RePEc:lpe:wpecbs:201302
    as

    Download full text from publisher

    File URL: http://econ.feb.ui.ac.id/uploads/201302.pdf
    File Function: First version, 2012
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:aph:ajpbhl:2004:94:2:225-229_5 is not listed on IDEAS
    2. repec:lpe:efijnl:199820 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Cigarette; Consumption Pattern; Excise Tax; Regressivity; Computable General Equilibrium;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lpe:wpecbs:201302. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Muhammad Halley Yudhistira). General contact details of provider: http://edirc.repec.org/data/feuinid.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.