Economic impacts of excise taxes on tobacco farming: macro and micro perspective

Abstract

As a macro perspective, the purpose of research aimed at estimation of the impacts of the increasing in the retail price of domestic cigarettes on domestic demand for tobacco leaf, area planted to tobacco, and labor use in tobacco farming. The simulation by using the econometric model with the secondary data set was utilized in the research method. The empirical evidence of Thailand’s simulation results can be implied that although the excise tax instrument has been beneficial for tobacco control policy, its supply-side effect is supposed to be realized. As a micro perspective, the purpose of research aimed at analysis of the effects of improvement of Thailand’s excise tax structure in September 2017 on a household income of Virginia, Burley, Turkish, and Thai Traditional tobacco farmer.  The statistical method for comparison of two means (the crop year 2017/2018 and 2018/2019) with the primary data set was utilized in the research method. The results reveal that sample groups of Virginia, Burley, and Turkish tobacco farmer in a case study of Chiang Rai, Phetchabun, and Roi Et provinces, respectively, who sell their tobacco leaf to the only Tobacco Authority of Thailand (TOAT) as well as the sample groups of Burley tobacco farmer who sell their tobacco leaf to TOAT, export company, and/or middleman have lower household incomes with statistically significant at 0.05 levels. Therefore, the National Tobacco Community Trust Fund in Thailand is supposed to be an option to manage such issues.