Effects of the Brazilian tax reform plans on the tobacco market.

The simulated scenarios demonstrated that, to keep the cigarette prices at least at the same level as those in the current tax scheme, TET should be no less than 77.85% of the retail price. This means that any politically feasible tax reform should result in higher cigarette prices and a reduction in cigarette consumption. Considering the nationwide effect, in all scenarios, the total increase in tobacco tax revenue is around 8.5% or 1.5 billion BRL per year. This extra revenue is highly desirable in an environment of chronic fiscal imbalance and the COVID-19 pandemic crisis.