The Incidence of Tobacco Taxation: Evidence from Geographic Micro-Level Data

Hanson, Andrew; Sullivan, Ryan

doi:10.2139/ssrn.1268305

Cited by 37 publications

(54 citation statements)

References 18 publications

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“…Another assumption was that tax increases would be fully passed through to the consumer. This is often the case, but subproportionate or supraproportionate tax pass-throughs have also been reported 24 25 20. Similarly, price increases in this study were treated as aggregated values and we did not make a distinction between state and federal taxes.…”

Section: Discussionmentioning

confidence: 89%

Left-digit price effects on smoking cessation motivation

et al. 2013

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Section: Discussionmentioning

confidence: 89%

Left-digit price effects on smoking cessation motivation

et al. 2013

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“…Prior studies in this area relied on the analysis of tobacco industry documents,8 Nielsen Homescan data,10 self-reported price data from tobacco users,11 surveys of tobacco retailers,7 local tax collection data6 or economic modelling and simulation 5 12…”

Section: Discussionmentioning

confidence: 99%

Tobacco product prices before and after a statewide tobacco tax increase

Brock¹,

Choi

Boyle

et al. 2015

Tob Control

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Background In 2013, the State of Minnesota Legislature passed a tobacco tax increase that increased the combined cigarette excise and sales tax by $1.75 (from $1.60 to $3.35) and increased the tax on non-cigarette tobacco products from 70% to 95% of the wholesale price. The current study explores the change in tobacco prices in retail locations and whether the tax increase was fully passed to consumers. Methods An observational study of tobacco retail prices was performed in a sample of 61 convenience stores in Minnesota, North Dakota, South Dakota, and Wisconsin. Six rounds of data were collected between May 2013 and January 2014. In each round, purchases were made at the same stores for the same four tobacco products (Camel Blue cigarettes, Marlboro Gold cigarettes, Grizzly Wintergreen moist smokeless tobacco, and Copenhagen Wintergreen moist smokeless tobacco). Results For all studied tobacco products, prices in Minnesota increased significantly after the tax increase (Round 1–Round 6). After controlling for price changes in neighboring states, the average price difference in Minnesota for the two cigarette brands increased by $1.89 and $1.81, which are both more than the $1.75 tax increase. For moist smokeless, the average price difference increased by $0.90 and $0.94. Significant price changes were not observed in the comparison states. After the introduction of the minimum moist smokeless tax, a significantly higher proportion of Minnesota stores offered price promotions on smokeless tobacco. Conclusions A large tobacco tax resulted in an average retail cigarette price exceeding the tax, suggesting the industry over-shifted the cigarette tax increase to consumers in Minnesota. The findings support the known public health benefit of tobacco tax increases while highlighting the need for additional information about how, or if, tobacco companies use price promotions to blunt the impact of tax increases.

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“…In addition, consistent with economic theory, global evidence has also shown that cigarette or alcohol excise taxes are not passed homogeneously to all users [20–26,28–31]. The pass-through rates may vary widely by brand or type of vendors [25,31], manufacturers’ market power [30], the distance to cheaper resources [20,23,24,26] or the type of excise tax [28,29]. …”

Section: Introductionmentioning

confidence: 97%

Does every US smoker bear the same cigarette tax?

Malarcher

O’Halloran

et al. 2014

Addiction

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Aims To evaluate state cigarette excise tax pass-through rates for selected price-minimizing strategies. Design Multivariate regression analysis of current smokers from a stratified, national, dual-frame telephone survey. Setting United States. Participants A total of 16 542 adult current smokers aged 18 years or older. Measurements Cigarette per pack prices paid with and without coupons were obtained for pack versus carton purchase, use of generic brands versus premium brands, and purchase from Indian reservations versus outside Indian reservations. Findings The average per pack prices paid differed substantially by price-minimizing strategy. Smokers who used any type of price-minimizing strategies paid substantially less than those who did not use these strategies (P < 0.05). Premium brand users who purchased by pack in places outside Indian reservations paid the entire amount of the excise tax, together with an additional premium of 7–10 cents per pack for every $1 increase in excise tax (pass-through rate of 1.07–1.10, P < 0.05). In contrast, carton purchasers, generic brand users or those who were likely to make their purchases on Indian reservations paid only 30–83 cents per pack for every $1 tax increase (pass-through rate of 0.30–0.83, P < 0.05). Conclusions Many smokers in the United States are able to avoid the full impact of state excise tax on cost of smoking by buying cartons, using generic brands and buying from Indian reservations.

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The Incidence of Tobacco Taxation: Evidence from Geographic Micro-Level Data

Abstract: -This paper uses a recent increase in

Cited by 37 publications

References 18 publications

Left-digit price effects on smoking cessation motivation

Left-digit price effects on smoking cessation motivation

Tobacco product prices before and after a statewide tobacco tax increase

Does every US smoker bear the same cigarette tax?

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