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

Tobacco industry pricing strategies for single cigarettes and multistick packs after excise tax increases in Colombia

INTRODUCTION

Taxes on tobacco products are an efficient way of reducing consumption. However, they are only effective if passed on to consumers with higher prices. This study aims to examine tobacco industry (TI) pricing strategies in response to tax increases, and whether they differ by price segments or presentation (packs or individual sticks) in Colombia. This is the first such academic study in Latin America and the first anywhere to include the market for single sticks.

METHODS

Using data on cigarette pricing/taxation from a survey of smokers (2016-2017) and official government data on pricing (2007-2019), the TI's pricing strategies were examined, split by brand, price segments, different sized packs and single cigarettes.

RESULTS

The TI employed targeted pricing strategies in Colombia: differentially shifting taxes; and launching new brands/brand variants. The industry overshifted taxes when increases were smaller and predictable, but used undershifting more when there was a larger increase in 2017, after which it mostly overshifted on budget and premium (but undershifted mid-priced) brands. The prices for single sticks increased more than the tax increase in 2017 when their consumption also increased.

CONCLUSION

The pricing strategies identified suggest excise taxes can be increased further, particularly the specific component, to reduce the price gap between brand segments. Brands should be restricted to a single variant along with prohibitions on launching new brands/brand variants. Lastly, since the pricing of single sticks does not match the pattern of packs, more monitoring of their sales and distribution is required, especially since they promote consumption and hinder effective implementation of tobacco tax policies.

Tobacco industry pricing strategies in response to excise tax policies: a systematic review

OBJECTIVE

To explore what is known about the tobacco industry's (TI) price-based responses to tobacco excise tax policies and whether these vary by country income group using a systematic review.

DATA SOURCES

Studies assessing TI pricing tactics were identified via searches of five online databases using a combination of search keywords.

STUDY SELECTION

Inclusion criteria were applied by two reviewers independently who screened all search results (titles and abstracts) for possible inclusion. They identified 37 publications that reported TI pricing tactics.

DATA EXTRACTION

Study details were tabulated, and information was extracted on the country income group, population characteristics, excise tax structure, and pricing strategies.

DATA SYNTHESIS

Of the 37 publications identified, 22 were conducted in high-income countries, while 15 covered low-income and middle-income countries (LMICs). Major pricing strategies employed were: differentially shifting taxes between products (35 studies); launching new brands/products as pathways for downtrading (six studies), product promotions and different prices for the same products for different customers (six studies); price smoothing (two studies); and changing product attributes such as length/size of cigarettes or production processes (three studies).

CONCLUSIONS

While there is limited evidence to fully ascertain industry responses to tax increases, this review suggests that the TI widely uses a multitude of sophisticated pricing strategies across different settings around the world with the intention of undermining tax policies, thereby increasing tobacco consumption and maximising their profits. There is a need for further research in this area especially in LMICs so that effective policy responses can be developed.

Assessing the Effects of a Tobacco Tax Reform on the Industry Price-Setting Strategy

In July 2020, the Executive Power submitted Bill no. 3887-2020 as the first step towards a wide reform of the Brazilian tax system. It will replace the current PIS/COFINS (charged on turnover of companies) by the CBS (a tax on goods and services), which includes a special regime for cigarettes. The novelty is that the specific cigarette tax will be charged on the highest retail price per cigarette brand across the country. This research simulates three scenarios that differ according to the price-setting strategy of the tobacco industry in reaction to the proposed tax reform. In all simulations, the tax reform would result in considerably higher cigarette prices, lower cigarette consumption, higher tax collection, and an implicit minimum price that is far above the current official price floor. Furthermore, the price dispersion and cross-border shopping across states would be reduced because prices and tax burden per brand would tend to be the same across the country due to the dominant price-setting strategy in the cigarette industry.

National Cancer Societies and their public statements on alcohol consumption and cancer risk

BACKGROUND AND AIMS

Studies have shown that alcohol consumption is a risk factor for oral, pharyngeal, laryngeal, esophageal, liver, colon, rectal and breast cancer. It would therefore be expected that cancer prevention organizations would incorporate these facts into their public stance on the consumption of alcohol. The aims of this study were to: (1) assess how national cancer societies in developed English-speaking countries [i.e. English-speaking countries belonging to the Organization for Economic Co-operation and Development (OECD)] communicate alcohol-related cancer risk to the public and (2) compare whether these organization's advocacy of increased alcohol taxes is in line with their advocacy of tobacco tax increases to reduce cancer risk.

METHODS

We searched the websites of the following national cancer organizations for all statements related to the relationship between alcohol consumption and cancer risk: Cancer Council Australia, Canadian Cancer Society, Irish Cancer Society, Cancer Society New Zealand, Cancer Research UK and the American Cancer Society. A categorical system was developed to code the qualitative data for health statements, alcohol consumption recommendations, and tax policy recommendations. Websites were analyzed in March of 2017.

RESULTS

All organizations, with the exception of the American Cancer Society and Canadian Cancer Society, state that alcohol is a group 1 carcinogen and that even low-level alcohol consumption increases risk for some cancers. Additionally, while the American Cancer Society supports increasing tobacco taxes through its cancer action network, it has not advocated for increased alcohol taxes in relation to support for tobacco tax increases.

CONCLUSION

Analysis in 2017 of the websites for national cancer societies in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States-including Cancer Council Australia, the Canadian Cancer Society, the Irish Cancer Society, Cancer Society New Zealand, Cancer Research UK and the American Cancer Society-shows that only the American Cancer Society and Canadian Cancer Society websites fail to state that alcohol is a group 1 carcinogen and can cause cancer at low doses, and that there is no safe threshold for cancer risk.