Heated tobacco products in Serbia: tax differentials, relative prices, and excise tax pass-through

Zdravković, Aleksandar and Zubović, Jovan and Nedeljković, Boban (2026) Heated tobacco products in Serbia: tax differentials, relative prices, and excise tax pass-through. Tobacco induced diseases, 24 (184). ISSN 1617-9625

Text Heated-tobacco-products-i.pdf - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (393kB)

Abstract

INTRODUCTION Heated tobacco products (HTPs) have become a rapidly growing segment of the tobacco market in Serbia. This study examines the evolution of HTP prices, taxation, and relative market positioning in Serbia following their entry into the market. METHODS A secondary data analysis was conducted using administrative and publicly available market data from Serbia. Monthly retail price and excise series covered Q3 2018 – Q1 2025, while aggregate tobacco sales data covered 2018–2023. Descriptive analysis was combined with first-difference panel regression models to estimate the pass-through effect, defined as the extent to which changes in HTP and cigarette excise taxes were reflected in HTP retail prices. RESULTS HTPs accounted for approximately 2.5% of estimated tobacco packs sold in 2019 and 6.25% in 2023. While HTP prices moved closer to the medium cigarette segment, real HTP prices in 2023–2024 were lower than in 2018 and the excise burden on HTPs remained much lower than on cigarettes. The excise share of the leading HTP brand reached 13.4% in 2024, compared with 61.4% for the leading cigarette brand. The estimated direct pass-through coefficient for HTP excise changes was 0.26 (95% CI: -0.07–0.59). The point estimate was below full pass-through, but the confidence interval included zero. By contrast, cigarette excise changes were positively associated with HTP price changes (0.99; 95% CI: 0.61–1.36). CONCLUSIONS In Serbia, HTP market expansion has taken place under a tax regime in which the effective tax burden on HTPs remains substantially lower than that on cigarettes. The estimated pass-through effects suggest that the industry may have absorbed part of recent HTP excise increases, although this finding should be interpreted cautiously given the observational design of the study and limited identifying variation. Overall, the results point to the relevance of considering closer alignment between HTP and cigarette taxation within tobacco tax policy.

Actions (login required)

View Item