Tobacco taxes and illicit cigarette trade in Colombia

Gallego, Juan Miguel; Llorente, Blanca; Maldonado, Norman; Otálvaro-Ramírez, Susana; Rodríguez-Lesmes, Paul

doi:10.1016/j.ehb.2020.100902

Cited by 10 publications

(10 citation statements)

References 16 publications

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“…After the tax increase in 2017, the average self-reported price for cigarettes increased for all price categories (online supplemental table 1) and more smokers purchased cigarettes from street vendors 43. As observed in both years, more smokers bought singles at their last purchase as compared with packs and cartons, and the frequency increased from 61.8% in 2016 to 73% in 2017 which was statistically significant 50. In regard to the sale of packs, a pack of 10 sticks is more commonly purchased as compared with packs of 20, 18 or 14 (a single observation in 2017).…”

Section: Background Resultsmentioning

confidence: 69%

“…The DEICS-COL survey has been used before; we present a summary of it here as appropriate background to enable our results to be put into context. For more details, please see the previous publications,43 49 50 and the online supplemental appendix for a summary table.…”

Section: Background Resultsmentioning

confidence: 99%

“…The 2016 survey was carried out 4 months before a major tax increase in Colombia while the 2017 wave was collected 8 months after. Details of the study enrolment and protocols have been described previously 43 49 50. The interviewer-administered survey involved a mix of two methods: smoker’s self-report on consumption pattern, brand and last purchase information including pack size, price paid and place of purchase; and interviewer’s direct observation of cigarette packs/sticks to validate self-reporting.…”

Section: Methodsmentioning

confidence: 99%

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

Sheikh

Branston

Llorente³

et al. 2022

Tob Control

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IntroductionTaxes 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.MethodsUsing 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.ResultsThe 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.ConclusionThe 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.

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Section: Background Resultsmentioning

confidence: 69%

Section: Background Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

See 1 more Smart Citation

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

Sheikh

Branston

Llorente³

et al. 2022

Tob Control

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“…Other methods, allowing for more in-depth analysis of the illicit trade problem, involve primary data collection. Those techniques include littered pack collections (eg, Argentina37 and the USA38), purchasing packs from vendors (eg, India19) and pack examinations in smoker surveys (eg, Chile,21 Colombia20 39 40 and Georgia41). Some studies use a mix of two or more methods (Brazil,42 Mexico43 and Pakistan44).…”

Section: New Methods To Measure Illicit Tradementioning

confidence: 99%

Illicit trade in tobacco products: recent trends and coming challenges

2022

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BackgroundIllicit trade in tobacco products is a menace to the goal of eliminating tobacco consumption. Although tax policy is very effective in reducing consumption, illicit trade can reduce (though not eliminate) its effectiveness.MethodsThis article discusses the recent evolution of illicit trade and the context in which it occurred; the new methods that have been developed to measure it and, finally, the challenges in the next phase in the control of illicit trade.ResultsThere has been a remarkable stability in the penetration of cigarette illicit trade in the past decade. Such a stability, however, occurred in a world of shrinking tobacco consumption, implying a decreasing absolute illicit trade. Most countries have progressed in increasing tobacco taxes and changing tax structures. Prices of illicit cigarettes follow legal cigarette prices. Concomitantly, many new studies, independent from the tobacco industry, have been conducted allowing for better understanding of the illicit trade and providing inputs to its solution. The entry into force of the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products provides both a global and a national policy framework to further curb illicit trade. Instruments such as track-and-trace systems must be promoted and adopted to maximise reductions in illicit trade.ConclusionsGlobal efforts to curb the illicit trade in tobacco products are gaining momentum and progress has been made in many parts of the world. The next decade can witness a decisive decrease in tobacco consumption, both licit and illicit, if countries further engage in international collaboration.

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“…Some studies conclude that industry-funded estimates inflate likely levels of illicit cigarette use [6][7] . Other papers indicate that industry warnings against tax increases, based on illicit trade rates, in certain countries are not justified [8][9][10] .…”

mentioning

confidence: 99%

Measuring anomalies in cigarette sales using official data from Spanish provinces: Are the anomalies detected by the Empty Pack Surveys (EPSs) used by Transnational Tobacco Companies (TTCs) the only anomalies?

Cadahia¹,

Golpe²,

Álvarez³

et al. 2021

Tob. Induc. Dis.

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INTRODUCTION There is a literature that questions the veracity of the studies commissioned by transnational tobacco companies (TTCs) to measure the illicit tobacco trade. Furthermore, there are studies that have indicated that the empty pack surveys (EPSs) ordered by TTCs overestimate the size of this trade. This study simultaneously analyzed whether the EPSs established in each of the 47 Spanish provinces were accurate and measured anomalies observed in provinces where sales exceed expected values. METHODS To achieve the objectives of this study, provincial data on cigarette sales, prices and GDP per capita were used. These data were modeled with machine learning techniques that are widely used to detect anomalies in other areas. RESULTS The magnitude of the average anomaly in provinces where sales are higher than their expected values exceeds 40%, while the average anomaly in provinces where sales are lower than their expected values (as detected by the EPSs) is <15%. Furthermore, the results reveal that there is a clear geographical pattern to the provinces in which sales below reasonable values are observed. In addition, the values provided by the EPSs in Spain, as indicated in the previous literature, are slightly overestimated. Finally, some regions bordering other countries or that are highly influenced by tourism have observed sales that are higher than their expected values. CONCLUSIONS Cooperation between countries in their tobacco control policies can have better effects than policies developed based on information from a single country. The lack of control over the transactions of tourists and the inhabitants of bordering countries can cause important anomalies that distort the understanding of tobacco consumption that governments have based on official data.

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Tobacco taxes and illicit cigarette trade in Colombia

Cited by 10 publications

References 16 publications

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

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

Illicit trade in tobacco products: recent trends and coming challenges

Measuring anomalies in cigarette sales using official data from Spanish provinces: Are the anomalies detected by the Empty Pack Surveys (EPSs) used by Transnational Tobacco Companies (TTCs) the only anomalies?

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