Tobacco industry strategies undermine government tax policy: evidence from commercial data

Rosemary Hiscock, J. Robert Branston, Ann McNeill, Sara C. Hitchman, Timea R. Partos, Anna B. Gilmore

Research output: Contribution to journalArticle

15 Citations (Scopus)
16 Downloads (Pure)

Abstract

Objective: Taxation equitably reduces smoking, the leading cause of health inequalities. The tobacco industry (TI) can, however, undermine the public health gains realised from tobacco taxation through its pricing strategies. This study aims to examine contemporary TI pricing strategies in the UK and implications for tobacco tax policy. Design: Review of commercial literature and longitudinal analysis of tobacco sales and price data. Setting: A high-income country with comprehensive tobacco control policies and high tobacco taxes (UK). Participants: 2009 to 2015 Nielsen Scantrak electronic point of sale systems data. Main outcome measures: Tobacco segmentation; monthly prices, sales volumes of and net revenue from roll-your-own (RYO) and factory-made (FM) cigarettes by segment; use of price-marking and pack sizes. Results: The literature review and sales data concurred that both RYO and FM cigarettes were segmented by price. Despite regular tax increases, average real prices for the cheapest FM and RYO segments remained steady from 2013 while volumes grew. Low prices were maintained through reductions in the size of packs and price-marking. Each year, at the point the budget is implemented, the TI drops its revenue by up to 18 pence per pack, absorbing the tax increases (undershifting). Undershifting is most marked for the cheapest segments. Conclusions: The TI currently uses a variety of strategies to keep tobacco cheap. The implementation of standardised packaging will prevent small pack sizes and price-marking but further changes in tax policy are needed to minimise the TI's attempts to prevent sudden price increases.

Original languageEnglish
Pages (from-to)488-497
Number of pages10
JournalTobacco Control
Volume27
Issue number5
Early online date9 Oct 2017
DOIs
Publication statusPublished - 20 Aug 2018

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Tobacco Industry
tax policy
Taxes
nicotine
industry
Tobacco
evidence
factory
sales
tax increase
taxation
Tobacco Products
pricing
revenue
Costs and Cost Analysis
sale
Product Packaging
Budgets
Information Systems
smoking

Keywords

  • price
  • taxation
  • tobacco industry

ASJC Scopus subject areas

  • Health(social science)
  • Public Health, Environmental and Occupational Health

Cite this

Tobacco industry strategies undermine government tax policy: evidence from commercial data. / Hiscock, Rosemary; Branston, J. Robert; McNeill, Ann; Hitchman, Sara C.; Partos, Timea R.; Gilmore, Anna B.

In: Tobacco Control, Vol. 27, No. 5, 20.08.2018, p. 488-497.

Research output: Contribution to journalArticle

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