Tobacconomics Working Paper Series
Background Tobacco tax policy in Bosnia and Herzegovina currently assumes a gradual annual increase in the specific excise tax on cigarettes (0.15 BAM per year per pack). However, since 2019 policy makers in Bosnia and Herzegovina have frozen the increase in specific excise taxes. The Indirect Taxation Authority (ITA) increased the minimum excise in 2023 to 3.35 Bosnia-Herzegovina convertible marks (BAM) per pack, which is a change of 0.02 BAM compared to 2022. This research examines the effects of the increase in cigarette prices on government revenues from excise and indirect taxes, as well as the health impacts of tobacco tax increases. Methods Based on the data on legal cigarette sales and the tax structure, we employ tobacco tax simulation modeling to estimate revenue change and the impact on public health. The baseline year for our analysis is 2023, and we conduct forecasts for the period of 2024 – 2025. The estimations of the impact of the proposed increased excise on government revenues are done by applying different scenarios regarding price and income elasticities on different price segments. We analyze the impact of the increased prices on public health through the decrease in prevalence and number of smokers.