Modelling of the distribution of the tax burden of the excise tax on tobacco products: the antagonism of the economic and medical aspects

Abstract

Purpose. The purpose of the study is to model the distribution of the tax burden of excise duty on tobacco products through the prism of the medical and economic component.

Results. The authors indicated and compared the interpretation of the terms “tobacco raw materials”, “tobacco products”, “tobacco-containing products for electric heating”, “excise tax”, “medical warning for consumers of tobacco products” in accordance with the current legislation; possible excise tax rates with projected expectations of the value of tobacco products and tax revenues to the budget from excise tax in Ukraine. The importance of the research is strengthened by the results of a survey conducted by the authors of National Pirogov Memorial Medical University in the spring of 2024 in partial clarification of smoking trends among young people, comparison of the prevalence of smoking in the pre-war years and during the war. The authors argued that since the demand for cigarettes and alcoholic beverages is relatively inelastic, the introduction of an excise tax in Ukraine will not significantly reduce sales volumes. In this regard, revenues to the budget from the excise tax on cigarettes and alcoholic beverages will remain quite high. The results of the study proved that there is a tendency to increase tobacco smoking among young people in Ukraine. Most Ukrainians start smoking at a fairly early age, despite a fairly high level of awareness of the harm to health. Among the recommendations is a proposal to increase the excise tax on heated tobacco products by 50–55%.

Scientific novelty. The scientific novelty of the study lies in the implementation of graphical modelling of the distribution of excise duty on tobacco products in Ukraine and the distribution of the tax burden and inelastic demand for tobacco products in Ukraine.

Practical value. Using the graphical method, the paper analyses the possible efficiency losses resulting from an increase in the excise tax on cigarettes in Ukraine. The authors claim that the unprofitable burden of the excise tax on tobacco products is ultimately a loss for society of part of its benefits.