First, I will describe the situation with tobacco control in Ukraine and evaluate effectiveness of the existing tobacco control policy. Particular attention will be paid to such issues as impact of the current policy on tobacco consumption, prices, smuggling, advertising, etc. This will require analysing Ukrainian sources of information and in particular evaluating tobacco taxation policies during the recent years.
Second, I plan to discuss different economic tools of tobacco control where particular attention will be paid to taxation issues. Analysis of different tobacco taxation systems (i.e. specific, mixed, and ad valorem) is of particular importance given the heated debates currently taking place in Ukraine. The debates are focused on the following issue: which taxation system is better for Ukraine. Tobacco producers are especially active in the debates since each producer defends its own interests. Proper analysis of the effectiveness of different taxation systems from the public health viewpoint is missing in Ukraine.
In addition, international experience in applying different economic tobacco control tools will be analysed. This section will require extensive consultations with foreign experts and literature review.
Third, economic modelling techniques will be applied to simulate Ukraine’s
producer and consumer behaviour. This, in particular, includes econometric
modelling of consumer demand, demand for smuggled tobacco products, and
producer price policies.
Availability of cheap smuggled tobacco products in the domestic market is
particularly dangerous. This undermines government tobacco control efforts,
since if, for example, the government increases tobacco taxes to limit consumption,
consumers can easily switch to smuggled (illegal) products. Moreover, illegal
tobacco products can be even more hazardous for human health.
Based on such simulations, I will be able to determine factors affecting
producer and consumer decisions in the market for tobacco products, as well
as evaluate the strength of the factors’ impact.
Fourth, analysis presented in the previous sections will allow answering the question which economic tools of tobacco control should be used in Ukraine, and how they should be used. Economic models will help understand which policies can more effectively influence consumer and producer behaviour in Ukraine, while international experience will show which problems can appear when implementing those policies.
Fifth, policy recommendations will be developed. This will contain analysis of policy alternatives and possible consequences (in terms of tobacco consumption, government tax revenues, employment, tobacco smuggling, etc.) of each policy option. Based on such analysis, one policy alternative will be chosen.
The results of my research project are expected to fill the information gap regarding effective utilisation of tobacco control tools in Ukraine. Since based on the research I plan to develop direct policy recommendations, Ukrainian decision makers may find them useful while drafting economically grounded and justified policy decisions. Moreover, my research, if published and disseminated, will give economic grounding and impetus to public discussions regarding tobacco control policies.