Abstract
BackgroundThe Federal excise tax was increased for tobacco products on April 1, 2009. While excise tax rates prior to the increase were the same for roll-your-own (RYO) and pipe tobacco, the tax on pipe tobacco was $21.95 per pound less than the tax on RYO tobacco after the increase. Subsequently, tobacco manufacturers began labeling loose tobacco as pipe tobacco and marketing these products to RYO consumers at a lower price. Retailers refer to these products as “dual purpose" or “dual use" pipe tobacco.MethodsData on tobacco tax collections comes from the Alcohol and Tobacco Tax and Trade Bureau. Joinpoint software was used to identify changes in sales trends. Estimates were generated for the amount of pipe tobacco sold for RYO use and for Federal and state tax revenue lost through August 2011.ResultsApproximately 45 million pounds of pipe tobacco has been sold for RYO use from April 2009 to August 2011, lowering state and Federal revenue by over $1.3 billion.ConclusionsMarketing pipe tobacco as “dual purpose" and selling it for RYO use provides an opportunity to avoid paying higher cigarette prices. This blunts the public health impact excise tax increases would otherwise have on reducing tobacco use through higher prices. Selling pipe tobacco for RYO use decreases state and Federal revenue and also avoids regulations on flavored tobacco, banned descriptors, prohibitions on shipping, and reporting requirements.
Highlights
Increasing the price of tobacco products is an evidence-based intervention that prevents initiation of tobacco use among adolescents and young adults, reduces consumption of tobacco, and increases quit attempts [1,2,3,4]
Tobacco manufacturers have reformulated or re-labeled products to capitalize on disparities between tax rates on different types of tobacco products and minimize the impact taxes have on product prices [10]
While the tax on cigarettes, snuff and pipe tobacco was increased by 158%, the tax on small cigars and RYO tobacco increased by a greater amount to make those rates equivalent to the tax levied on cigarettes [11]
Summary
Increasing the price of tobacco products is an evidence-based intervention that prevents initiation of tobacco use among adolescents and young adults, reduces consumption of tobacco, and increases quit attempts [1,2,3,4]. Tobacco users may seek sources of lower priced tobacco products in response to a price increase instead of quitting tobacco use or reducing consumption, undermining the public health impact of the tax increase [5]. The excise tax rates for RYO and pipe tobacco were the same, but after the increase, the tax on pipe tobacco was $21.95 per pound less than the tax on RYO tobacco [11]. Tobacco manufacturers began labeling loose tobacco as pipe tobacco and marketing these products to RYO consumers at a lower price. Retailers refer to these products as ‘‘dual purpose’’ or ‘‘dual use’’ pipe tobacco
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
