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TC Online First, published on November 29, 2010 as 10.1136/tc.2010.039982
Brief report

Effectiveness of tax and price policies

in tobacco control
Frank J Chaloupka,1 Kurt Straif,2 Maria E Leon3
1
Economics, College of Business ABSTRACT METHODS
Administration, Health Policy Objective Over 20 experts on economics, epidemiology, Using the methodology established for IARC
and Administration, University of public policy and tobacco control were asked by the Handbooks,3 studies published (or accepted for
Illinois at Chicago, Chicago,
Illinois, USA International Agency for Research on Cancer (IARC) to publication up to the week of the meeting) in the
2
IARC Monographs, evaluate the strength of the available evidence on the openly available scientific literature were the main
International Agency for effects of tax and price policies to prevent and reduce source of evidence for the review and evaluation.
Research on Cancer, Lyon, tobacco use. Peer-reviewed government agency reports that were
France
3
Section of Environment and Methods Draft papers presenting and assessing the widely available were also considered. In excep-
Radiation, International Agency evidence on the following topics were developed by the tional cases, reports that were in their final form
for Research on Cancer, Lyon, experts in an 8-month period prior to the meeting: and publicly available, but subjected to varying
France tobacco industry pricing strategies and tax related extent of peer review, were included if they were
lobbying; tax, price and aggregate demand for tobacco; considered relevant to making an evaluation. The
Correspondence to
Maria E Leon, Section of tax, price and adult tobacco use, use among young WG assessed the quality and limitations of the data
Environment and Radiation, people and use among the poor; tax avoidance and tax when conducting their critical review and carried
International Agency for evasion; and the economic and health impact of tobacco out a consensus evaluation of the strength of the
Research on Cancer, 150 Cours taxation. Subsequently, papers were peer reviewed, evidence supporting 18 conclusion statements.
Albert Thomas, 69372 Lyon
Cedex 08, France;
revised and resubmitted for final discussion at a 6-day
[email protected] meeting at IARC in Lyon, France, where a consensus RESULTS AND CONCLUSIONS
evaluation of 18 concluding statements using the Table 1 presents the conclusion statements noting
Received 10 September 2010 pre-established criteria of the IARC Cancer Prevention the strength of evidence in their support and
Accepted 27 October 2010 Handbooks took place. Studies published (or accepted providing brief comments and representative refer-
for publication) in the openly available scientific literature ences to existing evidence. For 12 of the 18 state-
were the main source of evidence for the review and ments the WG concluded that there was sufficient
evaluation; other types of publications were included evidence. The majority of these related to the
when appropriate. effectiveness of increased tobacco excise taxes and
Results In support of 12 of the 18 conclusions, the prices in reducing overall tobacco consumption and
experts agreed that there was sufficient evidence of prevalence of tobacco use, including by promoting
effectiveness of increased tobacco excise taxes and cessation among current users, preventing initia-
prices in reducing overall tobacco consumption and tion and uptake among young people and lowering
prevalence of tobacco use and improvement of public consumption among those who continue to use.
health, including by preventing initiation and uptake The WG concluded that strong but not sufficient
among young people, promoting cessation among evidence supported four of the conclusion state-
current users and lowering consumption among those ments (see table); for example, that changes in the
who continue to use. For the remaining six concluding relative prices of tobacco products lead to some
statements the evidence was strong (four statements) substitution with relatively less expensive prod-
or limited (two statements). ucts. While results from studies from a few coun-
Conclusions The evidence presented and assessed in tries report that increases in cigarette prices are
IARC Handbook volume 14 documents the effectiveness associated with increased demand for other tobacco
of tax and price policies in the control of tobacco use and products, there are only a small number of these
improvement of public health. and additional research is needed to find out
whether these findings apply elsewhere.
For two of the statements the WG considered
INTRODUCTION there was only limited supporting evidence (see
Article 6 of the WHO Framework Convention table); for instance, that the demand for tobacco
on Tobacco Control (FCTC) calls for parties (ie, products among low income populations in low-
countries who have legally signed and are bound income and middle-income countries is more
to the treaty) to use tax and price policies on responsive to price than is the demand for tobacco
tobacco products to decrease tobacco use in the products among high-income populations. The
population.1 evidence examined is mixed and varies with
In May 2010 experts from 12 countries (the a country’s circumstances; for example, in settings
working group (WG), see Appendix) met at The where there is ready access to low or untaxed and
International Agency for Research on Cancer inexpensive tobacco products, low-income tobacco
(IARC) in Lyon, France to develop volume 14 of the users may be less sensitive to changes in prices.
IARC Handbooks of Cancer Prevention series on Based on the extensive evidence reviewed, the
the evidence for the effectiveness of tax and price WG recommended that ‘In order to improve public
policies in tobacco control.2 health by reducing tobacco use, governments

Chaloupka FJ, StraifArticle

Copyright K, Leon ME. Tobacco (or
author Control (2010).employer)
their doi:10.1136/tc.2010.039982
2010. Produced 1 of 4
by BMJ Publishing Group Ltd under licence.
 Table 1 Evidence for effectiveness of tax and price policies in tobacco control

2 of 4
Evidence
Conclusion statements Sufficient* Strongy Limitedz Comments and references
1 Increases in tobacco excise taxes that increase prices result in a decline in X There is a negative relationship between cigarette prices and cigarette consumption in countries at all levels
overall tobacco use of income based on aggregated data. Individual-level or household-level data corroborate an inverse relationship
Brief report

between cigarette price and total demand.4 5

2 Increases in tobacco excise taxes that increase prices reduce the prevalence X Studies based on survey data, prevalently from the US, support this association, including for products other
of adult tobacco use than cigarettes. Studies from other high-income countries support this finding. Survey data from low-income
and medium-income countries present challenges reflected in a large variation in price elasticitiesx and
yet these studies tend to corroborate the findings from high-income countries.6e8
3 Increases in tobacco excise taxes that increase prices induce current tobacco users to quit X A small number of studies from high-income countries report that higher prices increase smoking cessation9e11
4 Increases in tobacco excise taxes that increase prices reduce the prevalence X Studies from low-income, medium-income and high-income countries find that smoking prevalence among
of tobacco use among young people young people decreases as prices increase12e14
5 Increases in tobacco excise taxes that increase prices reduce the initiation X Youth smoking initiation is responsive to changes in cigarette prices, with the price response being
and uptake of tobacco use among young people, with a greater impact on positively related to higher thresholds of smoking initiation in studies with longitudinal data15 16
the transition to regular use
6 Increases in tobacco excise taxes that increase prices lower the consumption X Studies from low-income, medium-income and high-income countries find that smoking intensity decreases
of tobacco products among continuing users as prices increase6 17
7 Tobacco use among young people responds more to changes in tobacco X Studies that consider differences in price responsiveness by age from several countries generally find that tobacco
product taxes and prices than does tobacco use among adults use among young people will fall more in response to a price increase than will tobacco use among older people6 18
8 The demand for tobacco products in low-income countries is more responsive X There is evidence supporting this for many countries but with some exceptions, particularly where tobacco
to price than is the demand for tobacco products in high-income countries products have become increasingly affordable19
9 In high-income countries, tobacco use among lower-income populations is more responsive X Some studies find no differences, but the majority of studies are consistent with economic theory in finding
to tax and price increases than is tobacco use among higher-income populations that tobacco use among lower-income populations responds more to price6 8 20
10 In low-income and middle-income countries, tobacco use among lower-income X Relatively few studies from low-income and middle-income countries assess differences in price
populations is more responsive to tax and price increases than is tobacco use responsiveness by income, with some finding greater response among lower-income populations while
among higher-income populations others find little difference7 21 22
11 Changes in the relative prices of tobacco products lead to some substitution X Increases in cigarette taxes have been associated with higher use of other types of products
to the products for which the relative prices have fallen (ie, smokeless) or other brands of the same type of product23 24
12 Tobacco industry (TI) price discounting strategies, price-reducing marketing X Marketing techniques that reduce price include price discounts, sampling, specialty item distribution, coupons,
activities and lobbying efforts mitigate the impact of tobacco excise tax increases others. The resulting reductions in price increase tobacco use. Tobacco companies lobbying efforts to influence
tobacco tax levels, structures and the earmarking of tobacco tax revenues have been effective in deterring
some governments from raising taxes.25e28
13 Tobacco tax increases that increase prices improve population health X The reductions in tobacco use that result from higher taxes and prices lead to reductions in the death
and disease caused by tobacco use29 30
14 Higher and more uniform specific tobacco excise taxes result in higher X Specific excise taxes (those assessed based on quantity or weight) have a greater public health impact
tobacco product prices and increase the effectiveness of taxation policies than ad valorem excise taxes (those assessed based on value) because they lead to relatively higher
in reducing tobacco use tobacco product prices31
15 Tax avoidance{ and tax evasion** reduce, but do not eliminate, the public X Experiences in many countries demonstrate that tobacco use falls and revenues rise following a tax increase,
health and revenue impact of tobacco tax increases even when there is increased tax avoidance and evasion32 33
16 A coordinated set of interventions that includes international collaborations, X Countries have successfully reduced illicit trade in tobacco products through strong and coordinated
strengthened tax administration, increased enforcement and swift, severe multilateral efforts. However, relatively few countries have adopted comprehensive interventions and their
penalties reduces illicit trade in tobacco products longer-term impact is not known or difficult to assess given that forms of tax avoidance/evasion can
adapt/change in response to interventions to crack down on them.34
17 Tobacco tax increases increase tobacco tax revenues X Higher tax rates result in higher tax revenues given that taxes account for a fraction of prices and that
reductions in consumption are usually less than proportional to the increases in price that result from higher taxes19
18 Tobacco tax increases do not increase unemployment X Job losses in tobacco-dependent sectors are offset by increases in other sectors35e37

The World Bank classification of countries by income include, according to the 2008 gross national income per capita, calculated using the World Bank Atlas methods. High income: US$11 906 or more; upper middle income: US$11 905e$3856; lower middle
income: US$3855e$976; low income: US$975 or less (for the list of countries, see http://data.worldbank.org/about/country-classifications/country-and-lending-groups#Low_income).
*Sufficient evidence: an association has been observed between the intervention under consideration and a given effect in studies in which chance, bias and confounding can be ruled out with reasonable confidence. The association is highly likely to be causal.
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yStrong evidence: there is consistent evidence of an association, but evidence of causality is limited by the fact that chance, bias or confounding have not been ruled out with reasonable confidence. However, explanations other than causality are unlikely.
zLimited evidence: there is some evidence of association between the intervention under consideration and a given effect, but alternative explanations are possible.
Other available criteria: ‘Evidence of No Effect’, methodologically sound studies consistently demonstrate the lack of an association between the intervention under consideration and a given effect; ‘Inadequate/No Evidence’, there are no available methodologically
sound studies showing an associationdthe available studies are of insufficient quality, consistency or statistical power to permit a conclusion regarding the presence or absence of a causal association between the intervention and a given effect. Alternatively,
this category was used when no studies are available.
xPrice elasticity of demand, which is a number without units, indicates by what percentage the quantity demanded changes in response to a 1% change in the price.
{Tax avoidance includes legal activities and purchases in accordance with customs and tax regulations, most of which include the payment of some tobacco taxes, and are undertaken by individual tobacco users, including crossborder shopping, tourist shopping,
duty free shopping, internet and other direct purchases, industry reformulation and/or repositioning.
**Tax evasion includes illegal methods of circumventing tobacco taxes, such as the purchase of smuggled and illicit manufactured tobacco products. Those activities include small and large quantities and often, but not always, involve efforts to avoid paying any

Chaloupka FJ, Straif K, Leon ME. Tobacco Control (2010). doi:10.1136/tc.2010.039982

taxes (ie, small scale smuggling, large scale smuggling, illicit manufacturing, counterfeiting). Many of these activities are undertaken by larger criminal networks or other large-scale operations.
 Downloaded from http://tobaccocontrol.bmj.com/ on December 15, 2014 - Published by group.bmj.com

Brief report

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Chaloupka FJ, Straif K, Leon ME. Tobacco Control (2010). doi:10.1136/tc.2010.039982 3 of 4

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Brief report

Contributing to Handbook volume 14 but unable to attend the IARC Secretariat (France)
meeting J. Daniel
R. Iglesias (Brasil; Alliance for Tobacco Control, Rio de Janeiro) F. Islami
M. Pekurinen (Finland; National Institute for Health and Welfare, Helsinki) ME. Leon
A. Yurekli (Switzerland; World Health Organization, Geneva) Q. Li
K. Smith (United Kingdom; University of Bath, Bath) K. Straif

4 of 4 Chaloupka FJ, Straif K, Leon ME. Tobacco Control (2010). doi:10.1136/tc.2010.039982

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Effectiveness of tax and price policies in

tobacco control
Frank J Chaloupka, Kurt Straif and Maria E Leon

Tob Control published online November 29, 2010

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