**Table 5. Estimated parameters of alcohol consumption underreporting and share of excises in household expenditures by quintile**

||**1**<sup>**st**</sup> **quintile**|**2**<sup>**nd**</sup> **quintile**|**3**<sup>**rd**</sup> **quintile**|**4**<sup>**th**</sup> **quintile**|**5**<sup>**th**</sup> **quintile**|
|---|---|---|---|---|---|
|Scale of underreporting, times|7.9|6.5|5.6|4.5|2.8|
|Share of excises in expenditures for<br>alcohol,%|38.0|32.4|28.7|27.7|23.3|

_Source_ : own estimates based on Belstat (retail prices for alcoholic beverages) and Ministry of Taxes and Duties (excise tax rates for 2015); own assumptions.

According to our estimates, the total volume of excises paid by households in 2015 amounted to BYR 11.4 trillion. The total volume of excises collected by the general government was BYR 19.4 trillion. The difference is constituted by fuel excises paid by legal entities, as well purchases of tobacco and fuel by households for further sale abroad rather than for individual consumption. According to our estimates, excises are regressive in relative term (see Figure 8b), as lower deciles of population tend to spend a bigger share of their disposable resources on alcohol and tobacco products.

# _Import duties_

The impact of import duties on welfare of socially vulnerable groups was partly analyzed in research related to the consequences of Russian WTO accession to Belarus social policy (Shymanovich, 2013). These results showed that the reduction of import tariffs due to Russian WTO accession should have had a minor impact on population welfare, with a uniform distribution across the population. One of the reasons behind this was the small scale of the reduction of tariffs that is scheduled in the Russian WTO accession agreement.

In this analysis, we will apply the same methodology as in Shymanovich (2013) in order to see whether conclusions on the neutral influence of import duties on inequality hold within a full-fledged abolishment of import tariffs. The volume of import duties paid by households was estimate based on data on household consumption, the share of import products in retail sales and import tariffs according to the following formula: where _Ci_ is the consumption of the product _i_ from HBS data, _n_ is equal to 37 product groups (see table), _Sim_ is the share of imports in the consumption of the product _i_ , and _ti_ is a level of import tariff for the product _i_ .<sup>17</sup> Table 6 presents data required for these estimations. Import tariffs for expenditure lines were taken for corresponding product groups within the HS classification and weighted by import volumes. The share of import products in household consumption was supposed to be equal to the share of related goods in retail sales.

**Table 6. Assumptions and inputs for estimating import duties**

|**Expenditure line (COICOP)**|**Corresponding**<br>**HS code**|<br>**Weighted**<br>**average import**<br>**tariffs**|**Import share**<br>**in retail****|**Import price**<br>**elacticity*****|
|---|---|---|---|---|
|Expenditures for bread|1905|13.2|6.1|-0.8|
|Expenditures for pastry|1905|12.5|6.1|-0.8|
|Expenditures for flour|11|11.2|4.0|-1.2|
|Expenditures for cereals and beans|10|5.5|43.3|-0.9|
|Expenditures for macaroni food|1902|14.0|35.4|-0.7|
|Expenditures for milk|4|15.8|5.7|-1.4|
|Expenditures for sour cream and cream|4|15.8|5.7|-1.1|
|Expenditures for butter|405|18.2|1.3|-0.8|
|Expenditures for cheese|406|18.5|12.6|-0.6|
|Expenditures for other dairy products|4|15.8|5.7|-1.1|
|Expenditures for beef and veal|201|23.8|0.1|-1.0|
|Expenditures for pork|203|32.5|0.3|-2.9|
|Expenditures for sausages and smoked meat|16|14.8|0.6|-1.1|
|Expenditures for poultry|207|52.5|0.8|-2.9|

17 This formula allows estimating first order welfare effect of import duties abolishment on welfare of population, if one assumes that reduction of duties results in proportional reduction of prices. For estimating second order effect one should take into account import price elasticities _εi_ , estimated in Shymanovich (2013) based on data from Kee, Nicita, Olarreaga (2009). Related formula is:  _W_   _n Ci_  _ti_  _Sim_  (1  _ti_  _i_ ). _i_  1 1  _ti_ 1  _ti_ 17