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Cigarette Trafficking and Tax Parity: Results of a Natural Tax Experiment

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Objectives: In this study, we examine the impact of a natural quasi-experiment in tax parity on domestic cigarette trafficking in 3 US cities. Methods: We examined 3 northeastern US cities that experienced tax changes between 2011 and 2015 ($2.51 to $3.51 in Boston; $3.46 to $3.75 in Providence; and $1.60 to $3.60 in Philadelphia). Littered packs were collected from a random sample of census tracts in each city. The share of packs bearing proper local, known non-local, foreign or unknown, or no tax stamp was calculated for each city to determine domestic cigarette trafficking rates in 2011 and 2015. Results: The rate of trafficked packs decreased in Boston from a range of 3*6.0% to 37.1% in 2011 to a range of 8.0% to 11.3% in 2015. In Providence, trafficking decreased from a range of 30.2% to 57.0% of packs in 2011 to 7.8% to 12.1% of packs in 2015. In Philadelphia, trafficking increased from a range of 1.9% to 2.2% in 2011 to a range of 18.9% to 41.4%. These changes were statistically significant. Conclusions: Policies to encourage greater tax parity may decrease domestic cigarette trafficking, whereas policies that increase tax disparities may increase consumption of cigarettes from non-local sources.
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Keywords: ECONOMIC IMPACT; GEOGRAPHIC LOCATION; ILLICIT TRADE; POLICY (LOCAL, STATE, FEDERAL, INTERNATIONAL); TAXATION; TOBACCO REGULATION

Document Type: Research Article

Publication date: 01 March 2019

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  • Tobacco Regulatory Science (Electronic ISSN 2333-9748) is a rigorously peer-reviewed online scientific journal for the dissemination of research relevant to the regulation of tobacco products. The journal content includes a broad array of research domains, including chemistry, biology, behavior, community, and population-level surveillance and epidemiology, as well as knowledge syntheses (eg, meta-analyses or state-of-the-art reviews) and analytic modeling. All articles describe the policy relevance of the research outcomes. Given the global nature of tobacco regulation, particularly as a result of international and national policies, Tobacco Regulatory Science publishes high quality research that is relevant to global regulatory needs and requirements. Tobacco Regulatory Science is published electronically 6 times per year.
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