Keeping tobacco cheap: how tobacco companies undermine government tax measures

Malone, Ruth E.

doi:10.1136/tobaccocontrol-2018-054645

Cited by 2 publications

(3 citation statements)

References 2 publications

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“…Increasing tobacco taxes is one of the most effective ways to reduce tobacco consumption,1–4 smoking initiation by youth5 and social-economic inequalities caused by tobacco use 6. At the same time, it is well known that the tobacco industry counters government tax rises by using strategies such as over-shifting and under-shifting tax increases across their brand portfolios, smoothing prices changes and reducing pack sizes, all to keep tobacco affordable 7–11. Less is known, however, about how tobacco companies take advantage of an environment with low and static tobacco taxation.…”

Section: Introductionmentioning

confidence: 99%

Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011–2016

et al. 2019

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IntroductionThis study aims to analyse the non-tax-induced price increasing strategies adopted by tobacco industry in Taiwan, a high-income country with comprehensive tobacco control policies but low tobacco taxes and a declining cigarette market.MethodsUsing governmental tax, price and inflation data, we analysed cigarette sales volume, affordability, affordability elasticity of demand, market share, pricing and net revenue of the top five tobacco companies in Taiwan from 2011 to 2016 when no tax increases occurred.ResultsTotal revenue after tax grew significantly for all the major transnational tobacco companies between 2011 and 2016 at the expense of the state-owned Taiwan Tobacco and Liquor Corporation. In terms of market share, Japan Tobacco (JT) was the leading company, despite experiencing a small decline, while British American Tobacco and Imperial Brands remained stable, and Philip Morris International increased from 4.7% to 7.0%. JT adopted the most effective pricing strategy by increasing the real price of its two most popular brands (Mevius and Mi-Ne) and, at the same time, doubling the sales of its cheaper and less popular brand Winston by leaving its nominal retail price unaltered.ConclusionsLow and unchanged tobacco taxes enable tobacco companies to use aggressive pricing and segmentation strategies to increase the real price of cigarettes without making them less affordable while simultaneously maintaining customers’ loyalty. It is crucial to continue monitoring the industry’s pricing strategies and to regularly increase taxes to promote public health and to prevent tobacco industry from profiting at the expense of government revenues.

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Section: Introductionmentioning

confidence: 99%

Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011–2016

et al. 2019

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“…2 3 One prominent approach of the tobacco industry is the use of pricing mechanisms which maintain the availability of budget cigarettes. 4 Previous research has highlighted the important role of tobacco prices, but the tobacco industry has responded to increased taxation with a range of mechanisms to ensure the continued availability of budget cigarettes. [5][6][7] Globally, pricing strategies are perhaps most important in low-and middle-income countries (LMICs), where cigarette price differentials are generally larger than in high-income countries.…”

Section: Introductionmentioning

confidence: 99%

“…These analyses highlight differential success across regions and nations and serve as a timely reminder of the continued efforts of the tobacco industry to undermine tobacco control policies, which, when implemented properly, have been shown to be effective 2 3. One prominent approach of the tobacco industry is the use of pricing mechanisms which maintain the availability of budget cigarettes 4. Previous research has highlighted the important role of tobacco prices, but the tobacco industry has responded to increased taxation with a range of mechanisms to ensure the continued availability of budget cigarettes 5–7…”

Section: Introductionmentioning

confidence: 99%

Associations between cigarette prices and consumption in Europe 2004–2014

Millett

Filippidis

2020

Tob Control

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IntroductionIncreases in tobacco price are known to reduce smoking prevalence, but these correlations may be blunted by the availability of budget cigarettes, promoted by the tobacco industry to maintain profits.ObjectiveTo investigate the effect of budget cigarettes on cigarette consumption using data from Europe 2004–2014.MethodsData on the annual population-weighted cigarette consumption per adult come from the International Cigarette Consumption Database. Data on the annual tobacco price come from Euromonitor International for 23 European countries. Median prices and price differentials (operationalised as percentages obtained by dividing the difference between median and minimum prices by the median price) were examined. A linear random-effects model was used to assess associations between median prices and price differentials with cigarette consumption within 1 year and with a 1-year time lag.ResultsCigarette consumption per capita declined over the study period (−29.5 cigarettes per capita per year, 95% confidence interval −46.8 to −12.1). The analysis suggests that increases in cigarette price differentials, a marker of opportunities for smokers to switch to less expensive cigarettes, may be associated with greater consumption in the same year (6.4 for a 10% increase in differential, −40.0 to 52.6) and are associated with greater consumption in the following year (67.6, 25.8 to 109.5).ConclusionThese analyses suggest that even in Europe, where tobacco taxes are relatively high compared with other regions, differential cigarette pricing strategies may undermine tobacco control. Further research is needed on links between tobacco price structures and consumption, and policy design to maximise the effectiveness of tobacco taxation.

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Keeping tobacco cheap: how tobacco companies undermine government tax measures

Cited by 2 publications

References 2 publications

Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011–2016

Exploiting a low tax system: non-tax-induced cigarette price increases in Taiwan 2011–2016

Associations between cigarette prices and consumption in Europe 2004–2014

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