Cigarette Demand and Cigarette Taxation in Czech Republic
|Author:||Mgr. Jan Kvaček|
|Year:||2011 - summer|
|Leaders:|| doc. PhDr. Martin Gregor Ph.D.
|Work type:|| Economic Theory
|Awards and prizes:|
|Abstract:||This thesis addresses to the cigarette demand and excise tax on cigarettes in the Czech
The aim is to describe behavior of smokers and especially their reaction to the changes in
price of cigarettes. Data for household spending are used for this purpose. First part of this
thesis is dedicated to description of the cigarette market and socio-demographic
characteristics of smokers. Second part concerns with question whether smokers are rational
or myopic and how price elastic is their behavior. Then the rest of the thesis describes excise
tax payment mechanism and analyzes excise duty incomes.
The thesis finds that cigarettes are more affordable these days than in the beginning of 90’s.
Czech smokers do not fully realize future impact of their behavior and they seem to be very
inelastic witch respect to price. The price elasticity was estimated on value -0.2.
Given low price elassticitty and increasing purchasing power, the current cigarette excise tax
is considered to be too low.