This report analyzes the health and economic aspects of tobacco taxation in Poland, including an assessment of excise hikes proposed by the Polish government in July 2024. We provide a detailed analysis of demand elasticities for cigarettes, examining the effects of price and income changes on the smoking behaviour of households. We find that a 10% increase in the ratio of cigarette price to income leads to a 0.45 percentage point decrease in the probability of households buying cigarettes, or 1.7% fewer smokers. This effect is more pronounced among less educated groups. The overall cigarette consumption decreases by 4.0% in response to a 10% increase in cigarette prices relative to income. Since 2014, cigarette affordability in Poland has steadily increased, with the average wage in 2024 enabling the purchase of 54% more cigarettes than a decade earlier as incomes have risen faster than prices. In July 2024, the Ministry of Finance proposed accelerating excise tax hikes, aiming to return cigarette affordability to 2021 levels by 2027. We compare smoking prevalence projections under this accelerated scenario with those based on the current excise tax plan already in law. Our estimates suggest that the accelerated excise increases would reduce overall cigarette consumption by 6.8%, decrease the number of adult smokers by approximately 220,000, and prevent at least 66,000 premature deaths.
The authors are grateful for Kristijan Fidanovski, Mario Holzner, Nora Kungl, and Hana Ross’s valuable comments.
This research was funded by The Vienna Institute for International Economic Studies (wiiw). wiiw is a partner of the Bloomberg Philanthropies’ Initiative to Reduce Tobacco Use. The views expressed do not necessarily reflect the views of wiiw or Bloomberg Philanthropies.
