Tobacco Tax Policy Research Articles

Exposing industry-driven retail incentive programs that undermine tobacco tax policies

Exposing industry-driven retail incentive programs that undermine tobacco tax policies

Economic Costs of Tobacco Related Communicable and Non-Communicable Diseases in Sri Lanka

Background: Communicable and noncommunicable diseases attributable to tobacco are responsible for a significant proportion of morbidity and mortality burden in Sri Lanka. The economic costs of these disease conditions in Sri Lanka in 2015 is quantified in this study. Methodology: The prevalence-based cost of illness methodology was used in this study. The direct costs calculated are the inpatient and outpatient care costs borne by the government and out of pocket expenditure borne by patients for the diseases conditions, which were weighted by the respective population attributable fractions. The lost earnings due to absenteeism of the patients and carers due to seeking care and recuperation, and the loss of income due to mortality were the indirect costs calculated. Findings: The total economic cost of the communicable and noncommunicable diseases attributable to tobacco in Sri Lanka in 2015 was US$ 540·7 million, which was 0·65% of the GDP. The direct cost was US$ 236·35 million, which was 44% of the total cost, while the indirect cost was US$ 304·37 million, which was 56% of the total cost. Interpretation: Further strengthening the implementation of current policies laws and interventions, especially the tobacco taxation policy and the introduction of new policies such as plain packaging and banning the sale of single sticks are required to address the significant economic costs of tobacco attributable communicable and noncommunicable diseases in Sri Lanka. Funding: This project is supported by the World Health Organization Regional Office for South East Asia and partly supported by the Thailand Research Fund (TRF) and the International Decision Support Initiative (iDSI). Declaration of Interest: All authors report no competing interests. Ethical Approval:

Association of Cigarette Price Differentials With Infant Mortality in 23 European Union Countries

ImportanceRaising the price of cigarettes by increasing taxation has been associated with improved perinatal and child health outcomes. Transnational tobacco companies have sought to undermine tobacco tax policy by adopting pricing strategies that maintain the availability of budget cigarettes.ObjectiveTo assess associations between median cigarette prices, cigarette price differentials, and infant mortality across the European Union.Design, Setting, and ParticipantsA longitudinal, ecological study was conducted from January 1, 2004, to December 31, 2014, of infant populations in 23 countries (comprising 276 subnational regions) within the European Union.InterventionsMedian cigarette prices and the differential between these and minimum cigarette prices were obtained from Euromonitor International. Pricing differentials were calculated as the proportions (%) obtained by dividing the difference between median and minimum cigarette price by median price. Prices were adjusted for inflation.Main Outcomes and MeasuresAnnual infant mortality rates. Associations were assessed using linear fixed-effect panel regression models adjusted for smoke-free policies, gross domestic product, unemployment rate, education, maternal age, and underlining temporal trends.ResultsAmong the 53 704 641 live births during the study period, an increase of €1 (US $1.18) per pack in the median cigarette price was associated with a decline of 0.23 deaths per 1000 live births in the same year (95% CI, –0.37 to –0.09) and a decline of 0.16 deaths per 1000 live births the following year (95% CI, –0.30 to –0.03). An increase of 10% in the price differential between median-priced and minimum-priced cigarettes was associated with an increase of 0.07 deaths per 1000 live births (95% CI, 0.01-0.13) the following year. Cigarette price increases across 23 European countries between 2004 and 2014 were associated with 9208 (95% CI, 8601-9814) fewer infant deaths; 3195 (95% CI, 3017-3372) infant deaths could have been avoided had there been no cost differential between the median-priced and minimum-priced cigarettes during this period.Conclusions and RelevanceHigher cigarette prices were associated with reduced infant mortality, while increased cigarette price differentials were associated with higher infant mortality in the European Union. Combined with other evidence, this research suggests that legislators should implement tobacco tax and price control measures that eliminate budget cigarettes.

Tobacco Tax in Greece: Tax Policy Mistakes

Both Germany and Greece increased tobacco taxes beginning in 2010. Tobacco taxation in both countries is primarily aimed at generating revenues and at steering the behaviour of individuals affected by the taxation. The tobacco tax structure particularly in Greece has evolved from a mainly ad valorem excise to a specific excise. The comparison of both countries shows that the German tax system is able to generate stable revenues while Greek tobacco taxation policy leads to tax evasion activities among smokers.

How effective has tobacco tax increase been in the Gambia? A case study of tobacco control

ObjectivesThe objective of the present study was to evaluate how effective tobacco tax increase has been in increasing price of tobacco products and reducing tobacco consumption in the Gambia. In...

Key Policy Makers' Awareness of Tobacco Taxation Effectiveness through a Sensitization Program.

The implementation of 5 of the 6 WHO MPOWER program in Iran is satisfactory; the only notable shortcoming is the lack of tobacco taxation increases. This study was designed to increase key policy makers' awareness of tobacco taxation effectiveness through a sensitization program in Iran. This analytical and semi-experimental study in 2014 included 110 tobacco control key policy makers, who were trained and received educational materials on the importance of tobacco taxation. A valid and reliable questionnaire was completed before and three months after intervention. Data were analyzed using mean (SD), t-Test and analysis of variance. The mean (SD) scores at pre- and post-test were 2.7 ± 3 and 8.8 ± 1 out of 10, respectively. Paired t-tests demonstrated a significant difference in the pre- post-test knowledge scores. Increasing knowledge and promoting favorable attitudes of policy makers can lead to greater attention which could in turn change tobacco taxation policies.

The Demand for Cigarettes in Tanzania and Implications for Tobacco Taxation Policy.

The study attempts to estimate the demand for cigarettes in Tanzania and presents simulation results on the effect of the cigarette excise tax on smoking participation, government revenue, and related topics. After briefly summarizing the magnitude and spread of cigarette consumption in the country, the paper reviews some empirical estimates from African and other countries. The 2008 Tanzanian household budget survey was used to estimate the demand for cigarettes in Tanzania. The descriptive statistics suggest that the smoking prevalence for Tanzania is 15.35 percent with low variability across expenditure (income) groups. Smoking intensity and per capita consumption were estimated at 7.08 cigarettes and 1.33 cigarettes, respectively, a relatively low value. A two-part demand equation model was used to estimate various elasticities. For the overall equation, the price elasticities of smoking participation, smoking intensity, and total elasticity were estimated at -0.879, -0.853, and -1.732, respectively. Compared to similar results in other developing countries, the estimates appear quite high. When estimated by expenditure (income) groups, the magnitude of the elasticity appears higher among high expenditure groups than among low expenditure groups. Two simulation exercises were undertaken. First, the effect of different excise rates on smoking participation rate, cigarette consumption, tax revenue, and related responses was estimated and highlighted. Second, the same exercise was undertaken to determine the effect of a given increase in the cigarette excise tax on various expenditure groups. The overall results suggest that an increase in the excise tax on cigarettes in Tanzania would reduce cigarette consumption and increase government tax revenue.

A closer look at ‘Cheap White’ cigarettes

BackgroundGiven the prominence of Cheap Whites in illicit tobacco discussions, we examined various definitions, market presence, brand proliferation, manufacturers, production locations, trademark ownership, prices and compliance with tax stamp and...

Taxes on tobacco, alcohol and sugar sweetened beverages: Linkages and lessons learned

Increased consumption of sugar-sweetened beverages (SSBs) has been linked to increases in obesity in both high-income and low- and middle-income countries. Tobacco and alcohol taxes have proven to be effective tools to reduce tobacco and alcohol use. Many public health advocates propose using similar taxes to reduce consumption of SSBs. South Africa is a middle-income country that is considered a leader in the area of tobacco tax policy. A case study of tobacco and alcohol taxes is used to better understand optimal tax structures for SSBs. The case study tracks aggregate data over time on taxes, prices, consumption, tax revenues, and marketing expenditures at the brand level. Tobacco and alcohol taxes are shown to be effective in reducing the demand for tobacco. Additionally, taxes on the dose of alcohol rather than the volume of the beverage may incentivize producers to reduce the volume of alcohol in beverages through the supply side. While specific taxes based on the volume of beverages are likely to reduce the demand for SSBs, policy makers should also consider taxes on alcohol and SSBs that tax the dose of the alcohol and calories in order to create supply-side incentives for producers to lower alcohol and calorie levels in existing products or promote products with lower levels of alcohol and calories.

Differential responsiveness to cigarette price by education and income among adult urban Chinese smokers: findings from the ITC China Survey

BackgroundFew studies have examined the impact of tobacco tax and price policies in China. In addition, very little is known about the differential responses to tax and price increases based...

Tobacco tax and the illicit trade in tobacco products in New Zealand

ObjectivesTo estimate the size of illegal tobacco trade and consumption and assess the impact of tobacco tax on the illicit tobacco market in New Zealand (NZ). MethodsData on the import and seizure of legal and illegal tobacco in NZ was obtained from NZ Customs. Previous literature was used to calculate interception rates of illegal tobacco being smuggled and grown in NZ. Annual tobacco returns figures, obtained via the NZ Ministry of Health, were analysed to assess the market dynamics of legal tobacco products. ResultsThis study found that illicit tobacco constituted 1.8–3.9% of total national tobacco consumption in NZ in 2013. This represents a minor increase compared to previous estimates from 2007–09, suggesting that tax increases enacted by the NZ Government since 2010 have had a minimal impact on encouraging the use and procurement of illicit tobacco. ConclusionsThe results highlight a slight rise in small‐scale tobacco smuggling through ports and mail centres. However, tobacco returns figures show that current tobacco tax policy has forced manufacturers to focus on the production of cheap legal tobacco products, directly competing with and undercutting the demand for illicit tobacco products. At the same time, locally grown illicit tobacco continues to remain a small, isolated problem and, with recent cuts in duty free tobacco allowance, it is expected that overall illicit tobacco will remain a very small proportion of total tobacco consumption in NZ.

Effects of News Frames and Trust in Government on Support for Tobacco Tax Policy. Implications for Media Advocacy

Effects of News Frames and Trust in Government on Support for Tobacco Tax Policy. Implications for Media Advocacy

Are lower income smokers more price sensitive?: the evidence from Korean cigarette tax increases

BackgroundThe cigarette excise taxes and the price of a typical pack of cigarettes in Korea have not increased since 2005, and effective tax rate as a fraction of price and...

The impact of tobacco taxes on mortality in the USA, 1970–2005

ObjectivesThis paper aimed to estimate the effect of tobacco taxes on total mortality and cause-specific mortality in the 50 States plus the District of Columbia, USA, over the period 1970–2005...

Cigarette price level and variation in five Southeast Asian countries

ObjectivesTo monitor and analyse impacts of the interaction between tobacco excise tax policy and industry price strategy, on the price level and variation of cigarettes sold in five Southeast Asian...

Exploring the Relationship Between Cigarette Prices and Smoking Among Adults: A Cross-Country Study of Low- and Middle-Income Nations

Evidence on the relationship between cigarette prices and adult smoking in low- and middle-income countries (LMICs) is relatively limited. This study offers new descriptive evidence on this relationship using data from a set of 13 LMICs. We use Global Adult Tobacco Survey (GATS) cross-country data from approximately 200,000 participants aged 15 and older. Estimates on the relationship between prices and adult smoking were obtained from logit models of smoking participation and ordinary least squares models of conditional cigarette demand. Higher prices were associated with lower demand across countries, in terms of both smoking prevalence and daily number of cigarettes smoked among smokers. Our estimates suggest that the total price elasticity of cigarette demand in LMICs is approximately -0.53. We find that higher socioeconomic status (SES), represented through wealth and education effects is associated with lower chance of smoking overall, but among existing smokers, it may be associated with a larger number of cigarettes smoked. After controlling for a set of individual demographic and country characteristics, cigarette prices retain a significant role in shaping cigarette demand across LMICs. Because higher SES is associated with a reduced chance of smoking overall but also with increased daily consumption among current smokers, optimal tobacco tax policies in LMICs may face an added need to accommodate to shifting SES structures within the populations of these countries.

The effect of health improvements due to tobacco control on earnings in the United States

There is minimal evidence causally estimating the relationship between tobacco tax policy, population health and earnings. This article uses state tobacco taxes as an instrument for life expectancy to estimate the effect on earnings per capita in a panel of almost 3000 counties in the United States over the period 1970 to 2000. In the first stage of the model, we find that a one dollar increase in state tobacco taxes significantly increases life expectancy between 1.9% and 2.1%. Despite showing that tobacco tax is correlated with higher life expectancy and that, theoretically, improvements in health from reductions in smoking should lead to increased earnings, we find an insignificant impact of the induced gains in life expectancy from tobacco policy on county level earnings per capita over the period 1970 to 2000. The lack of significance is explained through local average treatment effects and the smaller economic impact of certain policies that impact health later in life. These results provide further evidence that the most effective interventions for improving income later in life are policy interventions with a direct impact on the health of younger cohorts rather than older cohorts.

OP01 How a Detailed Understanding of Industry Activities can Inform Public Health Policy: The example of Cigarette Pricing in Britain

BackgroundTobacco tax increases are the most effective means of reducing tobacco use and inequalities in smoking but effectiveness depends on transnational tobacco company (TTC) pricing strategies, specifically whether TTCs overshift...

The effect of cigarette prices on brand-switching in China: a longitudinal analysis of data from the ITC China Survey

BackgroundRecent studies have found that Chinese smokers are relatively unresponsive to cigarette prices. As the Chinese government contemplates higher tobacco taxes, it is important to understand the reasons for this...

Understanding tobacco industry pricing strategy and whether it undermines tobacco tax policy: the example of the UK cigarette market.

AimsTobacco tax increases are the most effective means of reducing tobacco use and inequalities in smoking, but effectiveness depends on transnational tobacco company (TTC) pricing strategies, specifically whether TTCs overshift tax increases (increase prices on top of the tax increase) or undershift the taxes (absorb the tax increases so they are not passed onto consumers), about which little is known.DesignReview of literature on brand segmentation. Analysis of 1999–2009 data to explore the extent to which tax increases are shifted to consumers, if this differs by brand segment and whether cigarette price indices accurately reflect cigarette prices.SettingUK.ParticipantsUK smokers.MeasurementsReal cigarette prices, volumes and net-of-tax- revenue by price segment.FindingsTTCs categorise brands into four price segments: premium, economy, mid and ‘ultra-low price’ (ULP). TTCs have sold ULP brands since 2006; since then, their real price has remained virtually static and market share doubled. The price gap between premium and ULP brands is increasing because the industry differentially shifts tax increases between brand segments; while, on average, taxes are overshifted, taxes on ULP brands are not always fully passed onto consumers (being absorbed at the point each year when tobacco taxes increase). Price indices reflect the price of premium brands only and fail to detect these problems.ConclusionsIndustry-initiated cigarette price changes in the UK appear timed to accentuate the price gap between premium and ULP brands. Increasing the prices of more expensive cigarettes on top of tobacco tax increases should benefit public health, but the growing price gap enables smokers to downtrade to cheaper tobacco products and may explain smoking-related inequalities. Governments must monitor cigarette prices by price segment and consider industry pricing strategies in setting tobacco tax policies.