Accelerating effective tobacco taxes in Ecuador: The impact of tax policy
Publication Source


Policy brief
The Americas
Economy status
Upper-middle-income economies

The tobacco agribusiness in Ecuador is not one of the most important economic sectors either in terms of its level of contribution in Gross Domestic Product (GDP) value added (0.01% of GDP in 2016), export share (0.25% of total exports in 2017) or direct job generation (less than 0.01% of the economically active population in 2017). At present there are about 364 active taxpayers whose line of business is directly related to the tobacco production chain and account for 0.02% of the universe of taxpayers. However, three companies belonging to the
Philips Morris Group (TANASA, ITABSA, PROESA) concentrate the market for the manufacture and wholesale of tobacco products. The objective of this research is to analyze the impact of tax reforms on the price and consumption of cigarettes and on tax revenue. It also presents the main recommendations on making tax policies more effective in reducing tobacco consumption.