Tobacco Pricing

Research

Impact of cigarette minimum price laws on the retail price of cigarettes in the USA
A new study has found that utilization of minimum price laws (MPLs) is not associated with an increase in cigarette prices in the marketplace. A recent study examined MPLs, a requirement for retailers and wholesalers to charge a minimum percentage mark-up for cigarette sales, as a means of increasing cigarette prices. Raising cigarette prices is known to encourage smokers to quit and reduce their cigarette consumption. Retail scanner data were used to determine the cigarette price differences between grocery stores, drugstores, and convenience stores in 2009. Average cigarette pack markups were highest in grocery stores ($0.46), while drugstore markups averaged 29 cents, and markups were lowest in convenience stores at 13 cents. In all three store categories, prices were lower in states that had MPLs. The ineffectiveness of MPLs in raising cigarette prices could be a result of weak enforcement, or markups that are not large enough to raise prices in the marketplace. Setting a standard minimum price, or “floor price,” for all cigarette purchases could be a more viable solution to eliminate discounts given to retailers and consumers. Click here to read more about this study published in Tobacco Control.

Study: Tax hike would cut smoking, raise revenue (GA)
According to a recent study, raising Georgia’s cigarette tax by $1 could reduce cigarette consumption as well as bring in a large amount of revenue to the state. Researchers at the University of Georgia argue that the state could cut cigarette consumption by 20% and gain $400 million in revenue from a $1 cigarette tax increase. An analysis of reactions from 1,056 smokers in Georgia, Rhode Island, and South Carolina to prices ranging from free to $20 per pack was used to determine these numbers. Georgia has among the lowest cigarette taxes in the country. Click here to read the study abstract published in Addiction.

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Reports

New fact sheet: The problem with roll-your-own (RYO) and other smoking tobacco
A new federal law signed by President Obama in July defines roll-your-own (RYO) cigarette machine stores as cigarette manufacturers, closing a tax loophole for RYO cigarette sales. While the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) announced that it will begin enforcing the new tax requirements for RYO tobacco starting in late August, another related tax loophole persists. According to the Campaign for Tobacco-Free Kids, much of the RYO tobacco purchased in the U.S. is mislabeled as “pipe tobacco” in order to avoid the higher federal excise tax on RYO tobacco. CTFK has released a new fact sheet, available here, to provide information about this continuing problem. The solution CTFK proposes is to equalize taxes on all combustible tobacco products, including loose tobacco and cigars.

Cigarette seizures quadrupled over two years (MD)
According to the Comptroller of Maryland, the state’s seizures of contraband have increased exponentially between 2010 and 2012. The amount of confiscated tobacco and alcohol products was more than four times higher than two years ago, and $2 million of illegal cigarettes have been confiscated in a twelve-month period. The increasing numbers are attributed to improvements in law enforcement monitoring, lax penalties that do not deter violators from their profitable illegal activities, and increased profits made by smugglers transporting cigarettes from the neighboring state of Virginia (where the cigarette tax is only thirty cents) into Maryland, where the state cigarette tax is higher at $2.30. To read more, click here.

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State Policy

Cigarette maker helps fund anti-tax effort (MO)
Donations from a large cigarette manufacturer will help fund the campaign against the proposed tobacco tax increase in Missouri. Tobacco maker Cheyenne International has given $200,000 to opposition groups fighting the proposed tobacco tax increase in the state, which will be voted on by the public in November. If approved by voters, the proposal would increase the cigarette tax to $1 per pack, and raise taxes on loose tobacco, cigars, and other tobacco products. Missouri has the lowest cigarette tax rate in the country at 17 cents per pack, and this increase would produce more revenue and decrease tobacco-related health costs in the state. Click here to read more. Click here to read a statement by the Campaign for Tobacco-Free Kids regarding the tax increase.

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