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Revenue from taxation of tobacco products accounts for more than 5 % of total government revenue in Thailand. The Thai tobacco industry is less significant: in 2000 it employed only 0.67 % of the total agricultural workforce, and only 0.11 % of all manufacturing workers. Until 1996, tobacco prices increased more slowly than prices of other consumer goods. After 1996 the trend reversed as tax/price policies were used to discourage smoking. Smoking prevalence is higher among men than women (50% and 3% respectively) and higher in rural than urban areas (26% and 18% respectively). Price and income elasticity of tobacco demand are analysed. They vary across income categories and between urban and rural areas. Overall, price elasticity is –0.39 and income elasticity is 0.70, similar to estimates for many other middleincome countries. Earlier studies that estimated health costs due to tobacco use are reviewed. Two main policy recommendations are made: to continue to use tax policy to reduce tobacco use and future health costs, which will also raise government revenue, and to enforce existing tobacco control measures better.

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