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INDUSTRY RESPONSES TO THE TOBACCO EXCISE TAX INCREASES IN SOUTH AFRICA
Author(s) -
Van Walbeek Corné
Publication year - 2006
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2006.00051.x
Subject(s) - excise , economics , tobacco industry , tax revenue , consumption (sociology) , revenue , monetary economics , tax incidence , ad valorem tax , business , tax reform , international economics , agricultural economics , market economy , public economics , macroeconomics , finance , social science , sociology , political science , law
The cigarette manufacturing market in South Africa is highly concentrated, with one company controlling more than 90 per cent of the market. In this paper the retail price of cigarettes is divided into three components: excise tax, sales tax and industry price. After decreasing during the 1970s and 1980s, the real industry price increased substantially during the 1990s. This coincided with sharp increases in the excise tax. The amplified increase in the real retail price of cigarettes decreased aggregate cigarette consumption by about a third. Despite this sharp decline, the cigarette industry substantially enhanced its revenues during the 1990s. However, since 2000 real industry price increases have been comparatively modest.