ANALYSIS OF THE STRATEGY TO REDUCE TOBACCO CONSUMPTION THROUGH RISING PRICES IN BRAZIL UNDER ECONOMIC THEORY VIEW:

ESTIMATION AND IMPLICATIONS

Abstract

This paper discusses an alternative strategy for a tobacco control policy in Brazil, since tobacco consumption, for some time, does not generate only health problems. The objective of this paper was approved for the debate on a tax revenue generated from the production of tobacco products to compensate for its negative externalities, estimating a Laffer Curve for this market. The results suggest that an optimal IPI rate is 32.45%, however, it has been observed that a real IPI rate between 2012 and 2015 was always close to the estimated optimum aliquot. Thus, focus on the requirement of minimum retail price for cigarettes in the country, simulating the behavior of the market due to the elimination of the strategy. With this static-comparative simulation, it was found
that cigarette industry revenues increased by 45.14% and the total IPI collected would increase
by 44.86%; furthermore, no scenario ideal, the burden of IPI should be redistributed to That the real IPI rate remains close to the estimated optimum rate and enables a product for the domestic industry capable of competing with the illegal product. It was concluded that the elimination
of the pricing strategy is drastically affected the profitability of the illegal cigarette industry, transferring resources to the state from its ability to soften as negative externalities generated by cigarette consumption, as well as transferring resources to the national legal industry Respecting environmental, health and labor standards in the country.