Hungary - Economics of Tobacco in Hungary Executive Summary...

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Economics of Tobacco in Hungary Executive Summary Since 1994, Hungary has witnessed a decline in total and per capita cigarette consumption, thanks to the increase of real cigarette price. This again proves that price measure is a very effective way to fight smoking. Currently, tax accounts for 61% of cigarette retail price in Hungary, lower than virtually all EU countries. There are still plenty of rooms for tax hikes and price increases for cigarettes, which would curb smoking epidemic in Hungary further. Fighting smoking would not affect Hungary’s economy in the long run. In 1999, tax revenues from cigarettes only accounted for 3% of total government tax revenue, lower than most of its ECA counterparts. In terms of trade, Hungary is also a net tobacco product importer. Meanwhile, employment in the tobacco manufacturing industry is very small and is declining rapidly. In 1999, Hungary accounted for about 2% of Europe and Central Asia (ECA) region’s cigarettes consumption. Generally speaking, ECA region is a place with serious smoking problems. With about 8% of world’s population, ECA region consumed 16% of world cigarette consumption in 1999. Hungary's Cigarette Consumption Share in ECA and ECA's Share in the World, 1999 Rest of the World 84% Hungary 2% ECA 16% Rest of ECA 98% Source: USDA Note: ECA countries include Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyz Republic, Latvia,
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Lithuania, Moldova, Poland, Romania, Russian Federation, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan and Yugoslavia. In 1970, total cigarette consumption was 22,502 million pieces in Hungary. It increased to 28,579 million pieces in 1994. However, both total consumption and consumption per person 15+ declined sharply after 1994. In 1999, total cigarette consumption was 19,360 million pieces. Cigarette Consumption in Hungary, 1970-1999 17000 19000 21000 23000 25000 27000 29000 31000 1970 1975 1980 1985 1990 1995 Total Consumption (Million Pieces) 110 120 130 140 150 160 170 180 Consumption Per Person 15+ (packs) Total Consumption Consumption Per Person 15+ Source: USDA Compared with other major ECA countries, per capita cigarette consumption in Hungary is just in the middle range. In 1999, consumption per 15+ was 119 packs in Hungary.
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Cigarette Consumption Per Person 15+ for Selected ECA Countries, 1999 70 96 104 109 113 119 119 123 138 145 0 20 40 60 80 100 120 140 160 Kazakhstan Belarus Ukraine Romania Czech Hungary Russia Turkey Bulgaria Poland Packs Source: USDA In 1999, average spending on cigarettes was estimated to be 103 US dollars in Hungary, which was 1.7% of the average manufacturing worker’s annual salary. If a typical smoker quit smoking, he/she could save 287 US dollars in 1999, which could be then used to buy
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This note was uploaded on 04/16/2010 for the course ECO 3411 taught by Professor Tabrizi during the Spring '10 term at St.Francis College.

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Hungary - Economics of Tobacco in Hungary Executive Summary...

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