Wilson, L.B., Pryce, R., Hiscock, R. et al. (3 more authors) (2021) Quantile regression of tobacco tax pass-through in the UK 2013–2019. How have manufacturers passed through tax changes for different tobacco products? Tobacco Control, 30 (e1). e27-e32. ISSN 0964-4563
Abstract
Background: The effectiveness of tax increases relies heavily on the tobacco industry passing on such increases to smokers (also referred to as ‘pass-through’). Previous research has found heterogeneous levels of tax pass-through across the market segments of tobacco products available to smokers. This study uses retail sales data to assess the extent to which recent tax changes have been passed on to smokers and whether this varies across the price distribution.
Methods: We use panel data quantile regression analysis on Nielsen commercial data of tobacco price and sales in the UK from January 2013 to March 2019 combined with official UK tax rates and inflation to calculate the rate of tax pass-through for factory made (FM) cigarettes and roll your own (RYO) tobacco.
Results: Following increases in the specific tax payable on tobacco, we find evidence of overshifting across the price distribution for both FM and RYO. The rate of the overshift in tax increased the more expensive the products were. This was consistent for FM and RYO. Additionally, our findings suggest that the introduction of standardised packaging was not followed by changes in how the tobacco industry responded to tax increases.
Conclusions: Following the repeated introduction of increases in specific tobacco tax as well as standardised packaging, we show that the tobacco industry applies techniques to keep the cheapest tobacco cheaper relative to the more expensive products when passing on tax increases to: smokers.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2020 The Author(s). This is an open access article distributed in accordance with the Creative Commons Attribution 4.0 Unported (CC BY 4.0) license, which permits others to copy, redistribute, remix, transform and build upon this work for any purpose, provided the original work is properly cited, a link to the licence is given, and indication of whether changes were made. See: https://creativecommons.org/licenses/by/4.0/. |
Keywords: | economics; taxation; tobacco industry |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Medicine, Dentistry and Health (Sheffield) > School of Health and Related Research (Sheffield) > ScHARR - Sheffield Centre for Health and Related Research |
Funding Information: | Funder Grant number NIHR Evaluation Trials and Studies Coordinating Centre NIHRDH-PHR/16/105/26 |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 04 Nov 2020 13:55 |
Last Modified: | 09 Feb 2022 08:17 |
Status: | Published |
Publisher: | BMJ Publishing Group |
Refereed: | Yes |
Identification Number: | 10.1136/tobaccocontrol-2020-055931 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:167416 |