Tobacco Pricing

Research

Menthol cigarette pricing at military and community retail outlets in the United States
A new study finds that the cost of menthol cigarettes is significantly lower in military exchanges or retailers compared to the prices of local non-military retailers. The cost of menthol cigarettes on 48 randomly selected U.S. military exchanges was determined via telephone, and the prices were then compared to the cost of the same brand of cigarettes in local Wal-Mart stores. Newport brand cigarettes were chosen for this study due to the brand’s popularity among African American and Hispanic populations. Newport menthol cigarettes were reported to be an average of 23% cheaper at the military exchanges than at local Wal-Mart stores. The Department of Defense mandates that tobacco products sold at military exchanges should be priced within 5% of the cost in civilian markets, and these data show that this directive has not been enforced. Click here to read the study abstract published in BMC Public Health. Click here to read the full article.

Cigarette price minimization strategies used by adults
A new study provides evidence that cigarette price minimization strategies such as buying in bulk or traveling to areas with lower taxation rates are most often utilized by racial/ethnic minorities and individuals with low socioeconomic status (SES). Researchers used data from the nationally-representative 2006-2007 Tobacco Use Supplement of the Current Population Survey (TUS-CPS) to assess the use of three cigarette price minimization strategies among adults: purchasing by the carton, travel to out-of-state locations with lower cigarette tax rates, and “some other way” which consisted of internet purchases, and out of the country purchases. This study reports that minimization strategies are widely used by low SES and minority smokers, and legislative changes such as a uniform state tax and the implementation of a bulk tax could help eliminate access to cheaper cigarette. Click here to read the full article published in the American Journal of Public Health.

top

Reports

Shut out of name-brand cigarettes, the Onondaga Nation will roll its own (NY)
In order to avoid paying state tobacco taxes in New York, the Onondaga Nation has decided to roll their own cigarettes. The Onondaga Nation will begin selling their “Eagles” cigarettes in a couple of months so that they will not have to pay the $4.35 per pack ($43.50 per carton) tax in New York. This action negates the purpose of the state tax to discourage smoking, as the tribal cigarettes will sell for significantly less than national brands. State policies require that cigarettes sold to non-Indians be taxed; however, there is evidence that native cigarettes are being sold to non-Indians and other tribes. Smoking is prevalent in Native American communities, and health officials believe that cheaper prices exacerbate the problem. Click here to read more.

Oklahoma tribal cigarette sales hit decade low (OK)
According to a report released by Tulsa World, cigarette sales in tribal shops in Oklahoma have reached the lowest levels reported in ten years. Tribal smoke shop sales have decreased from 50% of the state’s retail cigarette sales in 2009 to 33% in 2012. The decrease is attributed to the passage of a law in January 2010 that increased the cost of state tax stamps from 78 cents per pack to $1.03 per pack, the same rate as non-tribal retail stores. Additionally, state border store sales have declined due to changes to tax stamp laws at border stores that prevent them from using lower tax stamps to compete with neighboring states with lower tobacco tax rates. Low sales could indicate a reduction in smoking rates in Native American communities, which would help reduce the negative health effects of cigarette smoking in Native communities. Click here to read more.

Tax hike cuts tobacco consumption
A USA Today analysis found that a substantial federal tobacco tax increase has led to a large reduction in smoking among teens, the poor, and people dependent on government health insurance. In 2009, the federal tobacco tax increased from 39 cents to $1.01 per pack. The higher tax has brought in upwards of $30 million in revenue based on tax records, and three million fewer people smoked in 2011 compared to 2009, according to results of the National Health Interview Survey conducted by the Centers for Disease Control and Prevention (CDC). Click here to read more.

top

State Policy

Tobacco tax hike to go before voters again (MO)
Missouri voters will be able to vote to increase the cigarette tax in November, as a petition has been approved to include the measure on the ballot. The proposal will increase the tax on a package of cigarettes from 17 cents, among the lowest state cigarette taxes in the country, to 90 cents. Supporters of this measure suggest that the increase will improve the health of the citizens of Missouri, create funding for cessation and prevention programs, and increase funding for public schools in the state. Click here to read more about this initiative. Click here to read about how tobacco companies are not going to fight the tax increase due to a loophole that allowed smaller, off-brand cigarette companies not involved in the Master Settlement Agreement of 1998 to get the money they pay to cover tobacco-related health costs back at the end of the year. The tobacco settlement requires the involved tobacco companies to pay a portion of their revenue to states to compensate for money spent on tobacco-related health costs, and Missouri is last state to address this loophole.

top

Back to Table of Contents