This report studies the health and economic aspects of tobacco taxation in Poland, including an assessment of the expected impact of excise hikes implemented by the Polish government from March 2025 on smoking incidence and cigarette consumption. 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 0.47 percentage point decrease in the probability of households buying cigarettes, or 1.8% fewer smokers. This effect is more pronounced among less educated groups. The overall cigarette consumption decreases by 4.3% 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 October 2024, the new excise roadmap was adopted to return cigarette affordability by 2027 to the 2021 levels. We compare smoking prevalence projections under this accelerated scenario with those based on the previous excise tax plan. Our estimates suggest that the accelerated excise increases will reduce overall cigarette consumption by 7.3%, decrease the number of adult smokers by approximately 247,000, and prevent at least 74,000 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.
