This Report was written by the Centro de Investigación Económica y Presupuestaria A.C. (CIEP) in Mexico.
The Report shares the results of CIEP’s extended cost-benefit analysis of increasing tobacco taxes and the distributional effects raising tobacco taxes can have. CIEP found that larger tax increases on tobacco products, such as increases on the Special Tax on Production and Services (IEPS), would lead to larger reductions in tobacco consumption, especially among vulnerable households.
The Report also found that vulnerable households increase their available income by spending less on medical bills and increasing income due to more productive years of life.
The Policy Report concludes that larger tax increases on tobacco products provide greater benefits and are a progressive policy tool.