Excise tax avoidance: the case of state cigarette taxes

Local restrictions, population movement, and spillovers during the pandemic: Evidence from Japan's restaurant restriction

We investigate how a local restaurant restriction aimed at containing the COVID-19 pandemic influenced population movement and COVID-19 prevalence within and outside the restricted districts. Using data on restaurant location and hourly population at the 500-m-mesh level and on COVID-19 prevalence at both prefecture and municipality level in Japan, we employ a triple-difference approach and a difference-in-differences approach with fixed effects. While the policy decreased population movement to restaurant areas in the restricted districts, it caused spillovers of increasing population movement to restaurant areas in the neighboring nonrestricted districts. Consequently, COVID-19 prevalence worsened in the neighboring nonrestricted districts but improved in the restricted districts. Our findings suggest that imposing such local restrictions in the context of the pandemic may contain the pandemic only in the restricted districts while sacrificing economic activities within these districts and public health in neighboring nonrestricted districts.

Cross-State Border Nicotine Vaping Products Purchase-Early Evidence From State Emergency Sales Restrictions in 2019

INTRODUCTION

While retail sales and retailer inspection studies generally indicate high compliance with state sales restrictions on Nicotine Vaping Products (NVPs) within the restricted area, studies using survey data generally indicate that most users could readily continue gaining access to restricted NVPs. Our study bridges a gap in the current literature and investigates the potential role of cross-state border purchases to evade state emergency NVP sales restrictions in 2019.

AIMS AND METHODS

The study sample was restricted to NVP sales from the states neighboring Massachusetts, Rhode Island, and Washington, three states that implemented all NVP or flavored NVP sales restrictions in 2019. Among these neighboring states, the 2019 weekly county-level NVP sales by flavors (tobacco, mint/menthol, and other flavors) were compiled using Nielsen Scanner data. A quasi-experimental, comparison group pre-post study design was used to study the impacts of NVP sales restrictions on cross-state border NVP purchases.

RESULTS

Weekly NVP sales for border counties significantly increased in response to the MA, RI, and WA bans for tobacco flavored (56%, 45%, 14%, respectively), menthol/mint flavored (51%, 2%, 41%, respectively), and other flavored (79%, 3%, 4%, respectively) products, compared to sales for non-border counties (all p-values < .01).

CONCLUSIONS

Our study identified significant cross-state border NVP purchases in all studied states to circumvent NVP emergency sales restrictions in response to the EVALI outbreak. Policymakers should factor in these purchasing behaviors to evade sales restrictions when evaluating any future potential policies at the state or local levels.

IMPLICATIONS

While retail sales data and retailer inspections indicate high compliance with Nicotine Vaping Product (NVP) flavor sales restrictions from major retail outlets, survey data obtain mixed findings on the effects of sales restrictions on vaping behaviors. Our study identified a significant increase in cross-state border NVP purchases to circumvent NVP sales restrictions in 2019, consistent across all three settings of Massachusetts, Rhode Island, and Washington. Policymakers should factor in these cross-state border NVP purchases in response to sales restrictions when evaluating any future potential NVP sales restrictions.

Beyond the smoke: Historical analysis of the revenue implications of state cigarette tax policies, 1989 to 2019

INTRODUCTION

While cigarette taxes are a vital tobacco control tool, their impact on cigarette tax revenue has been largely understudied in the extant literature. This study examines how the level of cigarette taxes affects the revenue generated from cigarettes in the United States over a thirty-year period.

METHODS

We obtained the Tax Burden Data from the Centers for Disease Control and Prevention (1989-2019). Our dependent variables were gross cigarette tax revenue and per capita gross cigarette tax revenue, and our independent variable was state tax per pack. We used two-way fixed effects to estimate the relationship between state cigarette tax revenue and cigarette taxes, adjusting for state-level sociodemographic characteristics, state-fixed effects, and time trends.

RESULTS

The study reveals that raising cigarette state tax by 10 % led to a 7.2 % to 7.5 % increase in cigarette tax revenue. We also found state and regional variation in taxes and revenue, with the Northeast region having the highest taxes per pack and tax revenues. In 2019, most states had low or moderate taxes per pack and tax revenues per capita, while a few states had high taxes per pack and tax revenues per capita.

CONCLUSIONS

Our research demonstrates the positive impact of increased cigarette taxes on state tax revenue over three decades. Not only do higher taxes aid in tobacco control, but they also enhance state revenues that can be reinvested in state initiatives. Some states could potentially optimize their tax rates.

The Economics of Tobacco Regulation: A Comprehensive Review

Tobacco regulation has been a major component of health policy in the developed world since the UK Royal College of Physicians' and the US Surgeon General's reports in the 1960s. Such regulation, which has intensified in the past two decades, includes cigarette taxation, place-based smoking bans in areas ranging from bars and restaurants to workplaces, and regulations designed to make tobacco products less desirable. More recently, the availability of alternative products, most notably e-cigarettes, has increased dramatically, and these products are just starting to be regulated. Despite an extensive body of research on tobacco regulations, there remains substantial debate regarding their effectiveness, and ultimately, their impact on economic welfare. We provide the first comprehensive review of the state of research in the economics of tobacco regulation in two decades.

The health and economic impact of the Tobacco 21 Law in El Paso County, Texas: A modeling study

In December 2019, the US federal Tobacco 21 (T21) law passed to raise the minimum legal purchase age for tobacco products from 18 to 21 years. Preliminary evidence suggests that the T21 law will restrict youth access to tobacco products, leading to decreases in tobacco use over their lifetime. This study expands the science through the use of systems modeling by linking decreases in youth tobacco use in El Paso County, Texas, due to the T21 law implementation, to potential cardiovascular health (CVH) benefits and health care cost reductions. Using a smoking behavior and cardiovascular disease agent-based model, we projected the T21 law's long-term effects on smoking prevalence and CVH outcomes in El Paso County, Texas. The estimated smoking prevalence in El Paso County, Texas, decreased by 2.7% among 18-24 year olds and by 5.2% among 25-44 year olds in 20 years with T21 law implementation (p < 0.01 for both population groups). By reducing tobacco use, the T21 law could prevent 5.4 coronary heart disease events per 1,000 adults and 6.1 S events per 1,000 adults over a lifetime. The model estimated a reduction in lifetime health care costs from $42,929 per person without T21 law to $41,985 per person with the policy. This study provides further evidence for policymakers and communities to understand the potential health and economic impacts of the federal T21 law at the local level. Results emphasize the need for comprehensive policy implementation and enforcement to produce its intended impact on health outcomes.

Quantile regression of tobacco tax pass-through in the UK 2013-2019. How have manufacturers passed through tax changes for different tobacco products?

BACKGROUND

The effectiveness of tax increases relies heavily on the tobacco industry passing on such increases to smokers (also referred to as 'pass-through'). Previous research has found heterogeneous levels of tax pass-through across the market segments of tobacco products available to smokers. This study uses retail sales data to assess the extent to which recent tax changes have been passed on to smokers and whether this varies across the price distribution.

METHODS

We use panel data quantile regression analysis on Nielsen commercial data of tobacco price and sales in the UK from January 2013 to March 2019 combined with official UK tax rates and inflation to calculate the rate of tax pass-through for factory made (FM) cigarettes and roll your own (RYO) tobacco.

RESULTS

Following increases in the specific tax payable on tobacco, we find evidence of overshifting across the price distribution for both FM and RYO. The rate of the overshift in tax increased the more expensive the products were. This was consistent for FM and RYO. Additionally, our findings suggest that the introduction of standardised packaging was not followed by changes in how the tobacco industry responded to tax increases.

CONCLUSIONS

Following the repeated introduction of increases in specific tobacco tax as well as standardised packaging, we show that the tobacco industry applies techniques to keep the cheapest tobacco cheaper relative to the more expensive products when passing on tax increases to smokers.

Tobacco price and use following California Proposition 56 tobacco tax increase

BACKGROUND

California Proposition 56 increased cigarette excise tax by $2 per pack with equivalent increases on non-cigarette tobacco products. We estimated the changes in cigarette price, cigarette use, and non-cigarette use following the implementation of Proposition 56 in California in 2017.

METHODS

Seven waves of Tobacco Use Supplements to the Current Population Survey (TUS-CPS) 2011-2019 data were used to obtain state-level aggregate self-reported outcomes, including cigarette price per pack, current and daily cigarette use, cigarette consumption per day, and current and daily use of non-cigarette tobacco products (hookah, pipe, cigar, and smokeless tobacco). A modified version of a synthetic control method was used to create a "synthetic" California that best resembled pre-policy sociodemographic characteristics and outcome trends in California while correcting time-invariant pre-policy differences. Various sensitivity analyses were also conducted.

RESULTS

The implementation of Proposition 56 was associated with an increase in self-reported cigarette price per pack in California ($1.844, 95%CI: $0.153, $3.534; p = 0.032). No evidence suggested that Proposition 56 was associated with the changes in the prevalence of current or daily cigarette use, cigarette consumption per day, or the prevalence of current or daily use of non-cigarette tobacco products.

CONCLUSION

Most of the cigarette tax increase following Proposition 56 in California was passed on to consumers. There is a lack of evidence that the implementation of Proposition 56 was associated with the changes in the use of cigarettes and other tobacco products such as hookah, pipe, cigar, and smokeless tobacco.

Impacts of local public smoking bans on smoking behaviors and tobacco smoke exposure

This paper examines the immediate and long-term effects of public smoking bans on smoking prevalence, smoking regularity, smoking intensity, and secondhand tobacco smoke exposure. We supplement the extensive literature on the effects of various types of tobacco control legislation on smoking behavior in developed countries by studying the provincial smoking bans and more recent national ban of a middle-income country, Argentina. We focus on the difference between full and partial smoking bans, and take advantage of the time and province variation in ban implementation in order to determine the causal effects of each type of ban. We find that full bans reduce national smoking prevalence over time, especially among younger demographic groups, but have no significant impact on intensity of smoking among smokers. Full bans also benefit nonsmokers, as they are associated with a significant reduction in environmental tobacco smoke exposure. Partial bans do not significantly impact smoking prevalence, and are found to increase smoking intensity among individuals who smoke every day. These findings provide support for ratification of full bans by all provinces according to the National Tobacco Control Law of 2011.

The effect of alcohol tax changes on retail prices: how do on-trade alcohol retailers pass through tax changes to consumers?

The effectiveness of alcohol duty increases relies on alcohol retailers passing the tax increase on to consumers. This study uses sales data from a market research company to investigate tax pass-through over 11 years for on-premise retailers in England and whether this varies across the price distribution, for different beverage categories and outlet types. Panel data quantile regression analysis is used to estimate the impact of 12 excise duty changes and 3 sales tax changes between 2007 and 2017 on prices. We use product-level quarterly panel data from for 777 alcoholic products. We undertake the regression at all outlets level separating products are analysed in seven broad beverage categories (Beer, Cider, RTDs, Spirits, Wine, Sparkling Wine, and Fortified Wine). We further test sensitivity by disaggregating outlets into seven outlet types. For all seven broad beverage categories, we find that there exists significant differences in tax pass-through across the price distribution. Retailers appear to "undershift" cheaper beverages (prices rise by less than the tax increase) and subsidise this loss in revenue with an "overshift" in the relatively more expensive products. Future modelling of tax change impacts on population subgroups could incorporate this evidence, and this is important because different socio-economic and drinker groups purchase alcohol at different points on the price distribution and hence are affected differently by tax changes. Governments could also potentially incorporate this evidence into future impact assessments.

Tobacco taxes and illicit cigarette trade in Colombia

This paper estimates the short-term impact of a twofold increase of the tobacco excise tax on consumption of illicit cigarette trade in Colombia. Using data collected before and after the tax increase from a novel smoker survey (DEICS-Col), the impact is estimated as the change in the probability that a smoker has illicit cigarettes. The methodology follows a difference-in-differences strategy, measuring the year-to-year variation of the proportion of illicit cigarettes between smokers who report buying low-priced cigarettes (the highest treatment intensity) and those who bought high-priced cigarettes (lowest treatment intensity). Estimations of the impact show an average increase of 4-5 percentage points on the proportion of illicit cigarettes relative to an initial penetration of low-priced illicit cigarettes of nearly 5.1 %.

Implementation of the First US Sugar-Sweetened Beverage Tax in Berkeley, CA, 2015-2019

Objectives. To identify lessons learned from implementation of the nation's first sugar-sweetened beverage (SSB) excise tax in 2015 in Berkeley, California.Methods. We interviewed city stakeholders and SSB distributors and retailers (n = 48) from June 2015 to April 2017 and analyzed records through January 2019.Results. Lessons included the importance of thorough and timely communications with distributors and retailers, adequate lead time for implementation, advisory commissions for revenue allocations, and funding of staff, communications, and evaluation before tax collection begins. Early and robust outreach about the tax and programs funded can promote and sustain public support, reduce friction, and facilitate beverage price increases on SSBs only. No retailer reported raising food prices, indicating that Berkeley's SSB tax did not function as a "grocery tax," as industry claimed. Revenue allocations totaled more than $9 million for public health, nutrition, and health equity through 2021.Conclusions. The policy package, context, and implementation process facilitated translating policy into public health outcomes. Further research is needed to understand long-term facilitators and barriers to sustaining public health benefits of Berkeley's tax and how those differ from facilitators and barriers in jurisdictions facing significant industry-funded repeal efforts.

Cross-border purchasing of cigarettes among smokers in Six Countries of the EUREST-PLUS ITC Europe Surveys

INTRODUCTION

The availability of lower-cost cigarettes in neighboring countries provides price-sensitive smokers with incentives to purchase cheaper out-of-country cigarettes. This study estimates the prevalence of and factors associated with cross-border purchasing of cheaper cigarettes among smokers from Germany, Greece, Hungary, Poland, Romania, and Spain. The prevalence of cross-border purchasing was estimated by residential location, defined as living in regions bordering a lower-price country (where prices were at least €1/pack lower), regions bordering a similar- or higher-price country, and internal non-border regions.

METHODS

Data were from a survey of nationally representative samples of adult smokers (n=6011) from Germany, Greece, Hungary, Poland, Romania, and Spain. The primary outcome was purchasing cheaper out-of-country cigarettes in the previous six months. Residential location was defined using The Nomenclature of Territorial Units for Statistics (NUTS2 in Germany and NUTS3 in the other countries). Multivariable logistic regression tested differences in purchasing cheaper out-of-country cigarettes by country and residential location.

RESULTS

Residential location was associated with purchasing cheaper out-of-country cigarettes in Germany and Poland (p<0.05): 31% of German and 11% of Polish smokers living in regions bordering lower-price countries reported purchasing cheaper out-of-country cigarettes in the previous six months. Smokers living in regions bordering lower-price countries had 4.21 times greater odds of purchasing cheaper out-of-country cigarettes compared to smokers living in non-border regions.

CONCLUSIONS

Overall, only a minority of smokers in the six countries purchased cheaper cigarettes outside their country. However, smokers living in regions bordering countries where cigarettes were at least €1/pack lower than their home country had significantly higher odds of purchasing cheaper out-of-country cigarettes. This effect was especially prominent among German smokers. Tax harmonization policies designed to minimize cross-border price differentials can eliminate lower-priced alternatives for price-sensitive smokers.

The health effects of smoking bans: Evidence from German hospitalization data

This paper studies the short-term impact of public smoking bans on hospitalizations in Germany. It exploits the staggered implementation of smoking bans over time and across the 16 federal states along with the universe of hospitalizations from 2000 to 2008 and daily county-level weather and pollution data. Smoking bans in bars and restaurants have been effective in preventing 1.9 hospital admissions (-2.1%) due to cardiovascular diseases per day, per 1 million population. We also find a decrease by 0.5 admissions (-6.5%) due to asthma per day, per 1 million population. The health prevention effects are more pronounced on sunny days and days with higher ambient pollution levels.

Differences in nicotine dependence, smoke exposure and consumer characteristics between smokers of machine-injected roll-your-own cigarettes and factory-made cigarettes

BACKGROUND

Consumption of machine-injected roll-your-own (RYO) filtered cigarettes made from pipe tobacco increased almost 7-fold from 2008 to 2011 in the United States.

METHODS

We used data from the Pennsylvania Adult Smoking Study to compare the differences in sociodemographic, smoking topography, nicotine dependence, and cotinine levels between 280 smokers using factory made (FM) cigarettes and 68 smokers using RYO cigarettes.

RESULTS

RYO smokers were older (41 vs. 37, P = 0.053), had significantly lower levels of income (P < 0.001) and education (P = 0.007), and were less likely to be fully employed (P = 0.009). RYO smokers consumed more cigarettes per day [CPD] (21 vs. 15, P < 0.001), and had a higher mean score on the Fagerström Test for Cigarette/Nicotine Dependence (5.2 vs. 4.1, P < 0.001). The main reasons for choosing RYO cigarettes were the lower cost (68%) and believed they are less harmful (12%). The average cost per pack of FM cigarettes was $5.74 vs. $1.13 for RYO. In multiple regression analyses, RYO smokers had significantly lower cotinine levels across all levels of CPD. Among smokers of king-size cigarettes, mean interpuff interval (P < 0.05) and total smoke duration (P < 0.01) per cigarette was significantly greater in RYO smokers. In laboratory measurements, RYO cigarettes contained more tobacco by weight than FM cigarettes, but weight varied by both tobacco and cigarette tube brands.

CONCLUSIONS

Machine-injected RYO cigarettes made from pipe tobacco are cheaper than FM cigarettes but may have higher abuse liability. Smokers who might otherwise reduce their cigarette consumption or quit altogether may continue to smoke RYO cigarettes due to their affordability.

The impact of a federal cigarette minimum pack price policy on cigarette use in the USA

BACKGROUND

Increasing cigarette prices reduce cigarette use. The US Food and Drug Administration has the authority to regulate the sale and promotion-and therefore the price-of tobacco products.

OBJECTIVE

To examine the potential effect of federal minimum price regulation on the sales of cigarettes in the USA.

METHOD

We used yearly state-level data from the Tax Burden on Tobacco and other sources to model per capita cigarette sales as a function of price. We used the fitted model to compare the status quo sales with counterfactual scenarios in which a federal minimum price was set. The minimum price scenarios ranged from $0 to $12.

RESULTS

The estimated price effect in our model was comparable with that found in the literature. Our counterfactual analyses suggested that the impact of a minimum price requirement could range from a minimal effect at the $4 level to a reduction of 5.7 billion packs sold per year and 10 million smokers at the $10 level.

CONCLUSION

A federal minimum price policy has the potential to greatly benefit tobacco control and public health by uniformly increasing the price of cigarettes and by eliminating many price-reducing strategies currently available to both sellers and consumers.

Comparing projected impacts of cigarette floor price and excise tax policies on socioeconomic disparities in smoking

Background

About half of all US states have cigarette minimum price laws (MPLs) that require a per cent mark-up on prices, but research suggests they may not be very effective in raising prices. An alternative type of MPL sets a floor price below which packs cannot be sold, and may be more promising. This new type of MPL policy has only been implemented in 1 city, therefore its benefits relative to excise taxes is difficult to assess.

Methods

We constructed a set of possible state floor price MPL options, and matched them to possible state excise tax hikes designed to produce similar average price increases. Using self-reported price and cigarette consumption data from 23 521 participants in the 2010–2011 Tobacco Use Supplement of the Current Population Survey, we projected changes in pack prices and cigarette consumption following implementation of each paired MPL and tax option, for lower and higher income groups.

Results

We project that state MPLs set at the average reported pack price would raise prices by $0.33 and reduce cigarette consumption by about 4%; a tax with a similar average price effect would reduce consumption by 2.3%. MPLs and taxes that raise average prices by more than $2.00 would reduce consumption by 15.9% and 13.5%, respectively. In all models, we project that MPLs will reduce income-based smoking disparities more than their comparable excise taxes.

Conclusions

Floor price cigarette MPLs set at or above what consumers currently report paying could reduce both tobacco use and socioeconomic disparities in smoking.

Have higher cigarette taxes in the United States discouraged smoking? A review of data from 1999-2013

INTRODUCTION

Cigarette smoking continues to be a leading cause of preventable morbidity and premature death in the United States. This study examined the impact of federal and state cigarette excise taxes on adult smoking between 1999 and 2013.

METHODS

Data came from the National Health Interview Survey, Behavioural Risk Factor Surveillance System and Tax Burden on Tobacco. Analyses were done from 1999-2013, 2002-6 and 2009-13. Associations between cigarette taxes, prices and smoking were examined in several states based on cigarette tax: Missouri and Virginia (low tax), Florida, Nebraska and Nevada (median tax) and New York and Rhode Island (high tax).

RESULTS

Smoking declined nationally from 22.8% (1999) to 19.0% (2013) with rates falling from 25.7% to 20.5% in men and 21.5% to 15.3% in women. Annual cigarette consumption (in millions) declined from 432,758 to 280,534 and per capita consumption from 1,621 cigarettes (1999) to 894 cigarettes (2013). Smoking declined across age, gender, race/ethnicity, education and poverty level in 2009-13 compared to 2002-6 with large reductions in states with higher cigarette taxes. Negative correlations between cigarette tax and smoking, and positive correlations between cigarette tax and price, were seen.

CONCLUSIONS

Higher cigarette taxes appear to have had a negative impact on smoking in the US. Our data suggest that states with higher cigarette taxes have lower smoking rates than states with lower taxes. Tax measures are however implemented as part of a comprehensive tobacco control package and further research is needed to assess the relative contribution of cigarette tax on smoking reductions in the states examined.

Tax Avoidance and Evasion: Cigarette Purchases From Indian Reservations Among US Adult Smokers, 2010-2011

Excise taxes are the primary public health strategy used to increase the price of cigarettes in the United States. Rather than quitting or reducing consumption of cigarettes, some price-sensitive smokers may avoid state and local excise taxes by purchasing cigarettes from Indian reservations. The objectives of this study were to (1) provide the most recent state-specific prevalence of purchases made on Indian reservations by non-American Indians/Alaska Natives (non-AI/ANs) and (2) assess the impact of these purchases on state tax revenues. We used data from a large national and state-representative survey, the 2010-2011 Tobacco Use Supplement to the Current Population Survey, which collects self-reported measures on cigarette use and purchases. Nationwide, 3.8% of non-AI/AN smokers reported purchasing cigarettes from Indian reservations. However, in Arizona, Nevada, New Mexico, New York, Oklahoma, and Washington State, about 15% to 30% of smokers reported making such purchases, resulting in annual tax revenue losses ranging from $3.5 million (Washington State) to $292 million (New York) during 2010-2011. Strategies to reduce the sale of non- or lower-taxed cigarettes to non-AI/ANs on Indian reservations have the potential to decrease smoking prevalence and recoup lost revenue from purchases made on reservations.

Exploring Impacts of Taxes and Hospitality Bans on Cigarette Prices and Smoking Prevalence Using a Large Dataset of Cigarette Prices at Stores 2001-2011, USA

In the USA, little is known about local variation in retail cigarette prices; price variation explained by taxes, bans, and area-level socio-demographics, and whether taxes and hospitality bans have synergistic effects on smoking prevalence. Cigarette prices 2001–2011 from chain supermarkets and drug stores (n = 2973) were linked to state taxes (n = 41), state and county bar/restaurant smoking bans, and census block group socio-demographics. Hierarchical models explored effects of taxes and bans on retail cigarette prices as well as county smoking prevalence (daily, non-daily). There was wide variation in store-level cigarette prices in part due to differences in state excise taxes. Excise taxes were only partially passed onto consumers (after adjustment, $1 tax associated with $0.90 increase in price, p < 0.0001) and the pass-through was slightly higher in areas that had bans but did not differ by area-level socio-demographics. Bans were associated with a slight increase in cigarette price (after adjustment, $0.09 per-pack, p < 0.0001). Taxes and bans were associated with reduction in smoking prevalence and taxes had a stronger association when combined with bans, suggesting a synergistic effect. Given wide variation in store-level prices, and uneven state/county implementation of taxes and bans, more federal policies should be considered.

Is Every Smoker Interested in Price Promotions? An Evaluation of Price-Related Discounts by Cigarette Brands

CONTEXT

Raising unit price is one of the most effective ways of reducing cigarette consumption. A large proportion of US adult smokers use generic brands or price discounts in response to higher prices, which may mitigate the public health impacts of raising unit price.

OBJECTIVE

The main purpose of this study was to evaluate the retail price impact and the determinants of price-related discount use among US adult smokers by their most commonly used cigarette brand types.

METHODS

Data from the 2009-2010 National Adult Tobacco Survey, a telephone survey of US adults 18 years or older, was used to assess price-related discount use by cigarette brands. Price-related discounts included coupons, rebates, buy 1 get 1 free, 2 for 1, or any other special promotions. Multivariate logistic regression was used to assess sociodemographic and tobacco use determinants of discount use by cigarette brands.

RESULTS

Discount use was most common among premium brand users (22.1%), followed by generic (13.3%) and other brand (10.8%) users. Among premium brand users, those who smoked 10 to 20 cigarettes per day were more likely to use discounts, whereas elderly smokers, non-Hispanic blacks, those with greater annual household income, dual users of cigarettes and other combustible tobacco products, and those who had no quit intentions were less likely to do so. Among generic brand users, those who had no quit intentions and those who smoked first cigarette within 60 minutes after waking were more likely to use discounts.

CONCLUSIONS

Frequent use of discounts varies between smokers of premium and generic cigarette brands. Setting a high minimum price, together with limiting the use of coupons and promotions, may uphold the effect of cigarette excise taxes to reduce smoking prevalence.

Heterogeneity in Smokers' Responses to Tobacco Control Policies

This paper uses unconditional quantile regression to estimate whether smokers' responses to tobacco control policies change across the distribution of smoking levels. I measure smoking behavior with the number of cigarettes smoked per day and also with serum cotinine levels, a continuous biomarker of nicotine exposure, using individual-level repeated cross-section data from the National Health and Nutrition Examination Surveys. I find that the cigarette taxes lead to reductions in both the number of cigarettes smoked per day and in smokers' cotinine levels. These reductions are most pronounced in the middle quantiles of both distributions in terms of marginal effects, but most pronounced in the lower quantiles in terms of tax elasticities. I do not find that higher cigarette taxes lead to statistically significant changes in the amount of nicotine smokers ingest from each cigarette. Copyright © 2015 John Wiley & Sons, Ltd.

Does smoke cross the border? Cigarette tax avoidance in France

This paper examines the impact on cigarette sales of the successive increases in cigarette prices in France from 2002 to 2004. Since the price differential between France and neighboring countries increased over the period in question, cross-border purchases became more financially attractive for smokers living near borders. Results from difference-in-differences estimates indicate that the decrease in cigarette sales observed in French border departments was around 20 % higher from 2004 to 2007 compared to non-border departments. The loss of fiscal revenue due to cross-border shopping since the tax increase amounts to 2 billion euros over the period 2002-2007. Our findings highlight the need for improved coordination of policies aimed at reducing tobacco consumption across European Union countries.

The self-medication hypothesis: Evidence from terrorism and cigarette accessibility

We use single equation and system instrumental variable models to explore if individuals smoke during times of stress (the motivation effect) and if they are successful in self-medicating short-term stress (the self-medication effect). Short-term stress is a powerful motivator of smoking, and the decision to smoke could trigger biological feedback that immediately reduces short-term stress. We use data on self-reported smoking and stress from 240,388 current and former smokers. We instrument short-term stress with temporal distance from September 11, 2001 (using date of interview). We instrument smoking with cigarette accessibility measures of cigarette price changes and distance to state borders. In the absence of accounting for endogeneity, we find that smoking is associated with increases in short-term stress. However, when we account for endogeneity we find no evidence of smoking affecting short-term stress. We do find a consistent positive effect of short-term stress on smoking.

Can you refuse these discounts? An evaluation of the use and price discount impact of price-related promotions among US adult smokers by cigarette manufacturers

OBJECTIVES

The raising unit price of cigarette has been shown to be one of the most effective ways of reducing cigarette consumption and increasing rates of successful quitting. However, researchers have shown that price-sensitive smokers have used a variety of strategies to mitigate the effect of the rising price of cigarettes on their smoking habits. In particular, 23-34% of adult smokers in the US use cheaper brands, and 18-55% use coupons or promotions. Little is known about the discount use by type of brands. As such, the main purpose of this analysis is to evaluate the uses and price discount effects of these price-related discounts by manufacturers and major brands.

SETTING

An analysis based on the cross-sectional 2009-2010 National Adult Tobacco Survey (NATS).

PARTICIPANTS

11 766 current smokers aged 18 or above in the USA.

PRIMARY OUTCOME MEASURES

Price-related discount was defined as smokers who used coupons, rebates, buy-one-get-one-free, two-for-one or any other special promotions for their last cigarettes purchase.

RESULTS

The use of price-related discounts and associated price impact vary widely by cigarette manufacturer and brand. Approximately one of three Camel, one of four Marlboro and one of eight Newport smokers used price-related discounts on their latest cigarette purchases. The average price reductions of discounts offered by Philip Morris (PM) or R.J. Reynolds (RJR) were around 29 cents per pack while that of Lorillard (Newport only) was 24 cents per pack. Cigarette brands that provided significant per pack price reductions include: PM Marlboro (28 cents), RJR brand Camel (41 cents), Doral (50 cents), Kool (73 cents) and Salem (80 cents), and Lorillard Newport (24 cents).

CONCLUSIONS

Policies that decrease price-minimisation strategies will benefit public health.

Excise tax avoidance: the case of state cigarette taxes

We conduct an applied welfare economics analysis of cigarette tax avoidance. We develop an extension of the standard formula for the optimal Pigouvian corrective tax to incorporate the possibility that consumers avoid the tax by making purchases in nearby lower tax jurisdictions. To provide a key parameter for our formula, we estimate a structural endogenous switching regression model of border-crossing and cigarette prices. In illustrative calculations, we find that for many states, after taking into account tax avoidance the optimal tax is at least 20% smaller than the standard Pigouvian tax that simply internalizes external costs. Our empirical estimate that tax avoidance strongly responds to the price differential is the main reason for this result. We also use our results to examine the benefits of replacing avoidable state excise taxes with a harder-to-avoid federal excise tax on cigarettes.

The consequences of high cigarette excise taxes for low-income smokers

BACKGROUND

To illustrate the burden of high cigarette excise taxes on low-income smokers.

METHODOLOGY/PRINCIPAL FINDINGS

Using data from the New York and national Adult Tobacco Surveys from 2010-2011, we estimated how smoking prevalence, daily cigarette consumption, and share of annual income spent on cigarettes vary by annual income (less than $30,000; $30,000-$59,999; and more than $60,000). The 2010-2011 sample includes 7,536 adults and 1,294 smokers from New York and 3,777 adults and 748 smokers nationally. Overall, smoking prevalence is lower in New York (16.1%) than nationally (22.2%) and is strongly associated with income in New York and nationally (P<.001). Smoking prevalence ranges from 12.2% to 33.7% nationally and from 10.1% to 24.3% from the highest to lowest income group. In 2010-2011, the lowest income group spent 23.6% of annual household income on cigarettes in New York (up from 11.6% in 2003-2004) and 14.2% nationally. Daily cigarette consumption is not related to income.

CONCLUSIONS/SIGNIFICANCE

Although high cigarette taxes are an effective method for reducing cigarette smoking, they can impose a significant financial burden on low-income smokers.