IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/16287.html
   My bibliography  Save this paper

Cigarette Excise Taxation: The Impact of Tax Structure on Prices, Revenues, and Cigarette Smoking

Author

Listed:
  • Frank J. Chaloupka, IV
  • Richard Peck
  • John A. Tauras
  • Xin Xu
  • Ayda Yurekli

Abstract

The main purpose of this study is to provide empirical evidence on the effects of the cigarette excise tax structure on three outcomes: cigarette prices, government revenues, and cigarette consumption. We composed cross-sectional time-series data for 21 EU countries from year 1998 to 2007 from various data resources. We provide strong evidence that the price gap between premium and low-priced brands is larger in countries with a greater share of ad valorem tax. A 10-percent raise in the share of ad valorem tax in total excise tax leads to about a 4 to 5 percent increase in the price gap, with a smaller impact in more concentrated markets. Our estimates confirm that greater instability of government tax revenues from cigarette excise taxes can be attributed to greater reliance on the ad valorem tax and such instability increases with the growth of manufacturers' market power. We also find that greater reliance on a specific tax has greater impact on cigarette smoking, but the impact diminishes with the growth of manufacturers' market power.

Suggested Citation

  • Frank J. Chaloupka, IV & Richard Peck & John A. Tauras & Xin Xu & Ayda Yurekli, 2010. "Cigarette Excise Taxation: The Impact of Tax Structure on Prices, Revenues, and Cigarette Smoking," NBER Working Papers 16287, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16287
    Note: EH
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w16287.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jha, Prabhat & Chaloupka, Frank (ed.), 2000. "Tobacco Control in Developing Countries," OUP Catalogue, Oxford University Press, number 9780192632463.
    2. Unknown, 2010. "WHO Technical Manual on Tobacco Tax Administration," University of California at San Francisco, Center for Tobacco Control Research and Education qt8tn2317v, Center for Tobacco Control Research and Education, UC San Francisco.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Odermatt, Reto & Stutzer, Alois, 2015. "Smoking bans, cigarette prices and life satisfaction," Journal of Health Economics, Elsevier, vol. 44(C), pages 176-194.
    2. Odermatt, Reto & Stutzer, Alois, 2018. "Tobacco Control Policies and Smoking Behavior in Europe: More Than Trends?," Working papers 2018/24, Faculty of Business and Economics - University of Basel.
    3. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(2), pages 288-317, April.
    4. Hyunchul Kim & Dongwon Lee, 2021. "Racial demographics and cigarette tax shifting: evidence from scanner data," Empirical Economics, Springer, vol. 61(2), pages 1011-1037, August.
    5. Carlo Ciccarelli & Gianni De Fraja & Silvia Tiezzi, 2021. "How hard is it to maximize profit? Evidence from a 19th-century Italian state monopoly," Oxford Economic Papers, Oxford University Press, vol. 73(2), pages 879-902.
    6. Luca Colombo & Umberto Galmarini, 2015. "Optimality and distortionary lobbying: regulating tobacco consumption," Working Papers 2015/2, Institut d'Economia de Barcelona (IEB).
    7. Carlo Ciccarelli & Pierpaolo Pierani & Silvia Tiezzi, 2018. "What Can We Learn about Smoking from 150 Years of Italian Data?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 40(4), pages 695-717, December.
    8. Ce Shang & Xuening Wang & Frank J Chaloupka, 2018. "The association between excise tax structures and the price variability of alcoholic beverages in the United States," PLOS ONE, Public Library of Science, vol. 13(12), pages 1-13, December.
    9. Anh Ngo & Geoffrey T. Fong & Lorraine V. Craig & Ce Shang, 2019. "Analysis of Gender Differences in the Impact of Taxation and Taxation Structure on Cigarette Consumption in 17 ITC Countries," IJERPH, MDPI, vol. 16(7), pages 1-11, April.
    10. Liang-Ting Tsai & Feng-En Lo & Chih-Chien Yang & Wen-Min Lo & Joseph Jordan Keller & Chiou-Wei Hwang & Ching-Feng Lin & Shu-Yu Lyu & Donald E. Morisky, 2016. "Influence of Socioeconomic Factors, Gender and Indigenous Status on Smoking in Taiwan," IJERPH, MDPI, vol. 13(11), pages 1-11, October.
    11. Harris, Jeffrey E. & Balsa, Ana Inés & Triunfo, Patricia, 2015. "Tobacco control campaign in Uruguay: Impact on smoking cessation during pregnancy and birth weight," Journal of Health Economics, Elsevier, vol. 42(C), pages 186-196.
    12. Marko Primorac & Silvija Vlah Jeric, 2017. "The Structure of Cigarette Excises in the EU: From Myths to Reality," CESifo Working Paper Series 6386, CESifo.
    13. Théophile T Azomahou & Racky Baldé & Abdoulaye Diagne & Pape Yona Mané & Ibrahima Sory Kaba, 2019. "Public finances and tobacco taxation with product variety: Theory and application to Senegal and Nigeria," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-21, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hoang Minh & Kim Bao Giang & Nguyen Bao Ngoc & Phan Thi Hai & Doan Thi Thu Huyen & Luong Ngoc Khue & Nguyen Tuan Lam & Pham Thi Quynh Nga & Nguyen The Quan & Nguyen Thi Xuyen, 2017. "Prevalence of tobacco smoking in Vietnam: findings from the Global Adult Tobacco Survey 2015," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 62(1), pages 121-129, February.
    2. Kidane, Asmerom & Hepelwa, Aloyce & Mdadila, Kenneth & Ngeh, Ernest & Hu, Teh Wei, 2017. "The demand for cigarette in Tanzania: A temporal approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 45, pages 136-143.
    3. Raydel Valdés-Salgado & Luz Myriam Reynales-Shiguematsu & Eduardo C Lazcano-Ponce & Mauricio Hernández-Avila, 2009. "Susceptibility to Smoking among Adolescents and Its Implications for Mexico’s Tobacco Control Programs. Analysis of the Global Youth Tobacco Survey 2003-2004 and 2006-2007," IJERPH, MDPI, vol. 6(3), pages 1-14, March.
    4. Katherine Clegg Smith & K. Welding & C. Kleb & C. Washington & J. Cohen, 2018. "English on cigarette packs from six non-Anglophone low- and middle-income countries," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 63(9), pages 1071-1079, December.
    5. Hsin‐Fan Chen & Sheng‐Hung Chen & Jie‐Min Lee & Huei‐Yann Jeng, 2010. "Who Are the Potential Smokers of Smuggled Cigarettes?," Asian Economic Journal, East Asian Economic Association, vol. 24(3), pages 221-234, September.
    6. Alsukait, Reem & Bleich, Sara & Wilde, Parke & Singh, Gitanjali & Folta, Sara, 2020. "Sugary drink excise tax policy process and implementation: Case study from Saudi Arabia," Food Policy, Elsevier, vol. 90(C).
    7. Blecher, Evan, 2015. "Taxes on tobacco, alcohol and sugar sweetened beverages: Linkages and lessons learned," Social Science & Medicine, Elsevier, vol. 136, pages 175-179.
    8. Bonu, Sekhar & Rani, Manju & Jha, Prabhat & Peters, David H. & Nguyen, Son Nam, 2004. "Household tobacco and alcohol use, and child health: an exploratory study from India," Health Policy, Elsevier, vol. 70(1), pages 67-83, October.
    9. Branko Milanovic, 2008. "Qat Expenditures in Yemen and Djibouti: An Empirical Analysis," Journal of African Economies, Centre for the Study of African Economies, vol. 17(5), pages 661-687, November.
    10. G. Guindon, 2014. "The impact of tobacco prices on smoking onset in Vietnam: duration analyses of retrospective data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(1), pages 19-39, January.
    11. Piotr Pękała & Andrzej Torój, 2017. "Wpływ czynników cenowych i niecenowych na konsumpcję tytoniu – analiza danych panelowych," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 47, pages 157-176.
    12. Xia Wan & Sanghyuk S Shin & Qian Wang & H Fisher Raymond & Huilin Liu & Ding Ding & Gonghuan Yang & Thomas E Novotny, 2011. "Smoking among Young Rural to Urban Migrant Women in China: A Cross-Sectional Survey," PLOS ONE, Public Library of Science, vol. 6(8), pages 1-7, August.
    13. Rijo M. John, 2006. "Household's Tobacco Consumption Decisions," Journal of South Asian Development, , vol. 1(1), pages 101-126, April.
    14. Carnazza, Giovanni & Liberati, Paolo & Resce, Giuliano & Molinaro, Sabrina, 2021. "Smoking and income distribution: Inequalities in new and old products," Health Policy, Elsevier, vol. 125(2), pages 261-268.
    15. Goel, Rajeev K., 2014. "Economic stress and cigarette smoking: Evidence from the United States," Economic Modelling, Elsevier, vol. 40(C), pages 284-289.
    16. Vedran Recher, 2019. "Tobacco smuggling in the Western Balkan region: Exploring habits, attitudes, and predictors of illegal tobacco demand," Working Papers 1901, The Institute of Economics, Zagreb.
    17. Théophile T Azomahou & Racky Baldé & Abdoulaye Diagne & Pape Yona Mané & Ibrahima Sory Kaba, 2019. "Public finances and tobacco taxation with product variety: Theory and application to Senegal and Nigeria," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-21, February.
    18. Sarntisart, Isra, 2003. "An Economic Analysis Of Tobacco Control In Thailand," University of California at San Francisco, Center for Tobacco Control Research and Education qt1gb9b3r8, Center for Tobacco Control Research and Education, UC San Francisco.
    19. Rousu, Matthew C. & Nonnemaker, James & Farrelly, Matthew, 2009. "The Value of Countermarketing Information to Smokers: Evidence from Field Auctions," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49219, Agricultural and Applied Economics Association.
    20. Blecher, Evan, 2008. "The impact of tobacco advertising bans on consumption in developing countries," Journal of Health Economics, Elsevier, vol. 27(4), pages 930-942, July.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16287. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.