Tax incidence of electronic nicotine delivery systems (ENDS) in the USA

BackgroundA growing number of states or jurisdictions in the USA have imposed excise taxes on electronic nicotine delivery systems (ENDS). However, there is no consensus on how best to tax ENDS.ObjectivesWe specifically compare the tax incidence or burden for ENDS and cigarettes and analyse how ENDS tax incidence is associated with the choices of tax bases and rates.MethodsWe calculate ENDS excise tax incidence as the percentage of retail prices for each state or jurisdiction. Next, we use ordinary least squares to evaluate how tax incidence is associated with the choices of tax bases (eg, a specific tax base vs a value or ad valorem tax base) and rates and how these associations are moderated by product types.ResultsENDS and cigarette tax incidence is similar at the state level. Nonetheless, when federal cigarette taxes are considered, the cigarette tax incidence is higher than the tax incidence on closed-system ENDS. The proportion of states that impose value taxes is higher for open systems (65.4%) than for closed systems (46.2%). A value tax base is associated with a 7 percentage point lower tax incidence compared with a specific tax base. Product type further moderates the association between tax base and incidence.ConclusionTax incidence can be used to measure the strength of ENDS tax policies and how they are compared with cigarette taxes. Policymakers who aim to prevent youth from using ENDS may consider a value tax base to raise the tax incidence of closed systems—the product type preferred by young people.

Standardising the measurement of e-cigarette taxes in the USA, 2010–2020

IntroductionE-cigarette taxes have been enacted by 30 states through April 2020. E-cigarette tax schemas vary, in contrast to cigarette taxes in the USA that are levied almost exclusively as excise taxes per pack. Some states use excise taxes on liquid and containers, others ad valorem taxes on wholesale prices and others sales taxes. It is therefore difficult to understand the relative magnitudes of these e-cigarette taxes and the overall e-cigarette tax size relative to the cigarette tax size.ObjectiveTo create and publish a database of state and local quarterly e-cigarette taxes from 2010 to 2020, standardised as the rate per millilitre of fluid.MethodsUsing Universal Product Code-level e-cigarette sales from the NielsenIQ Retail Scanner Data along with e-cigarette product characteristics collected from internet searches and visits to e-cigarette retailers, we develop a method to standardise e-cigarette taxes as an equivalent average excise tax rate measured per millilitre of fluid.ResultsIn 2020, the average American resided in a location with $3.08 in cigarette taxes and $0.34 in e-cigarette taxes (assuming 1 pack=0.7 fluid mL).ConclusionsThe public availability of this state and local standardised e-cigarette tax data will allow tobacco control researchers to study the relationship between e-cigarette taxes and tobacco and related outcomes more effectively.

The Introduction of Tobacco Excise Taxation in the Gulf Cooperation Council Countries: A Step in the Right Direction of Advancing Public Health

Background The Gulf Cooperation Council (GCC) countries relied, until recently, solely on import duties for tobacco products. The agreement for the introduction of an excise and value added tax (VAT) in 2016 and 2017, respectively, in most GCC countries, was a major breakthrough for public health. There is, however, ample room for improvement. Methods The study examines the outcomes of tax reforms, for both public health and public finances, based on the World Health Organization (WHO) recommendations and best practices worldwide. Tax simulations were performed using the WHO TaXSiM model. The study is based on data from Saudi Arabia, the only GCC country for which sufficient data existed. Results We recommend a stepwise tax reform, which involves increasing the current ad valorem excise tax rate, phasing out import duties keeping total tax share constant and introducing a minimum excise, and finally switching to a revenue-neutral specific excise. If implemented, cigarette tax reform simulations show that the recommended reforms would lead to a higher than 50% increase in cigarette prices, 16% reduction in cigarette sales and almost 50% increase in total cigarette tax revenue. A significant number of cigarette-related deaths would be averted. Conclusions The recommended tax reforms are expected to lead to significant improvements in both public health and tobacco tax revenues. Our results provide useful insights that are of relevance to the whole GGC region. The effectiveness of the reforms, however, requires a strong tax and customs administration, including the establishment of a good database to monitor and advance public health.

KELAYAKAN FINANSIAL USAHA TANI DAN PERSEPSI PETANI TERHADAP KEBIJAKAN KENAIKAN TARIF CUKAI HASIL TEMBAKAU (Studi Kasus di Kecamatan Suralaga Kabupaten Lombok Timur)

Tobacco is a national strategic commodity that contributes to state revenues and employment. The purpose of this research is to analyze tobacco farming income and to analyze farmers' perceptions regarding the policy of increasing excise tariffs on processed tobacco/cigarette taxes. The research method used is qualitative analysis with a descriptive analysis approach. The research was conducted in Suralaga District, East Lombok Regency. Suralaga sub-district was chosen because it is a sub-district that mostly cultivates tobacco commodities. Respondents used in this study were 30 respondent farmers. 15 farmers live in Bagik Payung Village, some 15 farmers live in Waringin Village. Both villages are tobacco farmers and are located in Suralaga District, East Lombok Regency. The results showed that tobacco farming in East Lombok Regency was declared feasible because based on the analysis, the farming experienced an income (profit) of Rp. 8,045,942/hectare/planting season with a farming feasibility level of 1.70> 1 (feasible category). Most farmers have the perception that the policy of increasing tobacco excise/cigarette tax aims to help the national economy through increasing state revenues, not to control the level of cigarette consumption. The local/central government has never socialized the increase in tobacco/cigarette excise. In addition, farmers also assume that the government has never provided assistance or compensation to farmers after the policy of increasing tobacco/cigarette excise. The increase in cigarette excise does not have a direct impact on the decline in the economic condition of farmers. The factors that have the most direct influence on farmers' income are uncertain weather conditions (climate change) and the determination of the selling price grade of tobacco harvests which is less transparent.

Assessing the Effects of a Tobacco Tax Reform on the Industry Price-Setting Strategy

In July 2020, the Executive Power submitted Bill no. 3887-2020 as the first step towards a wide reform of the Brazilian tax system. It will replace the current PIS/COFINS (charged on turnover of companies) by the CBS (a tax on goods and services), which includes a special regime for cigarettes. The novelty is that the specific cigarette tax will be charged on the highest retail price per cigarette brand across the country. This research simulates three scenarios that differ according to the price-setting strategy of the tobacco industry in reaction to the proposed tax reform. In all simulations, the tax reform would result in considerably higher cigarette prices, lower cigarette consumption, higher tax collection, and an implicit minimum price that is far above the current official price floor. Furthermore, the price dispersion and cross-border shopping across states would be reduced because prices and tax burden per brand would tend to be the same across the country due to the dominant price-setting strategy in the cigarette industry.

Distributional health and financial consequences of increased cigarette tax in Iran: extended cost-effectiveness analysis

Background To assess the potential impact of a tax-induced cigarette price increase on financial and health outcomes by different socioeconomic groups. Methods In a modeled condition using pooled cross-section data from Household Income and Expenditure Survey (2002–2017) and Iran 2019 population data, a methodology of an extended cost effectiveness analysis (ECEA) was applied to model the impact on cigarette consumption of hypothetically increased cigarette tax. The methodology was employed to evaluate: [1] health benefits (premature deaths averted); [2] health expenditures regarding smoking-related disease treatment averted; [3] additional tax revenues raised; [4] change in household expenditures on cigarettes; and [5] financial risk protection among male Iranian smokers in a time span of 60 years following a one-time increase in cigarette price of 75%. The Stata version 15.1 (StataCorp., College Station, TX, USA) was used to perform the relevant analysis and estimate regression models. Results A 75% increase in cigarettes price through taxation would reduce the number of smokers by more than half a million, 11% of them in the poorest quintile; save about 1.9 million years of life (11% of which would be gained in the lowest quintile compared to 20% in the highest one); eliminate a total of US$196.4 million of health expenditures (9% of which would benefit the bottom quintile). Such a policy could raise the additional annual tax revenues by roughly US$ 1 billion, where the top two quintiles bear around 46% of the total tax burden. We estimated that the tax increase would avert an estimated 56,287 cases of catastrophic expenditure that wholly concentrated among the bottom two expenditure quintiles. Conclusion Increasing cigarette tax can provide health and financial benefits, and would be pro-poor in terms of health gains, Out-of-Pocket (OOP) savings, and financial risk protection against smoking-related diseases.

Pajak Rokok Dalam Kebijakan Anggaran Kesehatan Di Provinsi Jawa Barat

Taxes are the country's largest source of income. Cigarettes are one of the goods that are subject to excise, and the results of cigarette excise are included in taxes for the region. The regulation on cigarettes has two opposite sides and traps in quite a dilemma. On the one hand, the cigarette tax provides a large income for a region, but on the other hand, the government must also be responsible for the negative impact of cigarettes on the health of its consumers, which results in an increase in the budget for health facilities. Law Number 28 of 2009 concerning Regional Taxes and Regional Levies Article 31 on cigarette taxes that enter local government revenues applies a minimum of 50% to enter into health service funding. The object of this research is the Regional Revenue Agency (BAPENDA) of Java Province. West Java Provincial Health Office. This research uses descriptive research methods and a qualitative approach. The use of cigarette taxes in West Java has been appropriate in terms of the inclusion of cigarette tax results in the health budget, but the absorption is still not optimal. The West Java Health Office focuses on the fulfillment of medical devices to deal with the negative effects of smoking on society. Meanwhile, local governments should be better at absorbing the budget from cigarette taxes in order to be effective and efficient in their use, then there needs to be socialization to the public regarding the special cigaretttax allocation for the health budget.