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Cigarette Demand, Taxation, and the Poor: A Case Study of Bulgaria
Abstract
This paper usesthe Living Standards Measurement Study (LSMS) Household Survey, conducted in 1995, to analyze demand for cigarettes in Bulgaria and the effects on the poor of a hypothetical revenue-maximizing specific excise tax increase levied on cigarettes. One important finding is that the tax increase has a beneficial effect on the poor, in the sense that the tax burden on the low and lower-middle group is reduced.