A trajetória das vendas de cigarros lícitos no Brasil caso não ocorresse a Covid-19: uma abordagem usando o Causal Impact

Abstract

Smoking is a behavior that can lead to nicotine dependence, and addiction is associated with health problems that can cause approximately 50 diseases, ranging from disabling to fatal, including respiratory diseases, cardiovascular diseases, and cancers. Brazil, together with 183 parties (182 countries and the European Union), is a signatory to the Framework Convention on Tobacco Control (FCTC), the first treaty aimed at reducing smoking. In line with this guideline, since 2012, the federal government has been increasing taxes and implementing a policy of raising the minimum price of cigarettes to discourage consumption while simultaneously boosting tax revenue. This approach appears plausible in the context of the price inelasticity of cigarette demand. However, the cigarette produced legally in Brazil has a substitute, namely the illegal product, whether smuggled or produced illicitly in the country. This fact suggests elasticity rather than inelasticity in cigarette demand. Consequently, between 2012 and 2022, there was an increase in the market share of illegal cigarettes and a decline in tax revenue. This scenario changed with the Covid-19 pandemic, which led to mobility restrictions and partial border closures, reducing the inflow of illegal cigarettes from Paraguay, the primary supplier of smuggled tobacco products. Additionally, the appreciation of the U.S. dollar during this period increased production costs for the Paraguayan tobacco industry. Given this context, this paper aims to estimate the behavior of legal cigarette sales in Brazil had the Covid-19 pandemic not occurred. The Causal Impact method, based on the Structural Bayesian Model and the State Space Model, is used to analyze a counterfactual scenario – that is, an estimate of how the cigarette market would have evolved without the pandemic’s impact. The main result is that, in the absence of the unexpected factors that benefited the legal cigarette market during the pandemic, sales of legal cigarettes would have continued their downward trend, negatively impacting tax collection and favoring the illegal product. This implies that, by applying the Causal Impact method, it was possible to simulate an alternative scenario, that is, a projection of what would have happened without the shock of the pandemic. This reinforces the fact that legal Brazilian cigarettes have a substitute and are no longer inelastic. Thus, the policy of raising taxes and increasing the minimum cigarette price to discourage consumption and maximize tax revenue is a fallacy that warrants further debate in terms of public policy.