The Federal excise tax was increased for tobacco products on April 1, 2009. While excise tax rates prior to the increase were the same for roll-your-own (RYO) and pipe tobacco, the tax on pipe tobacco was 21.95perpoundlessthanthetaxonRYOtobaccoaftertheincrease.Subsequently,tobaccomanufacturersbeganlabelingloosetobaccoaspipetobaccoandmarketingtheseproductstoRYOconsumersatalowerprice.Retailersrefertotheseproductsas“dualpurpose"or“dualuse"pipetobacco.DataontobaccotaxcollectionscomesfromtheAlcoholandTobaccoTaxandTradeBureau.Joinpointsoftwarewasusedtoidentifychangesinsalestrends.EstimatesweregeneratedfortheamountofpipetobaccosoldforRYOuseandforFederalandstatetaxrevenuelostthroughAugust2011.Approximately45millionpoundsofpipetobaccohasbeensoldforRYOusefromApril2009toAugust2011,loweringstateandFederalrevenuebyover1.3 billion.Marketing pipe tobacco as “dual purpose" and selling it for RYO use provides an opportunity to avoid paying higher cigarette prices. This blunts the public health impact excise tax increases would otherwise have on reducing tobacco use through higher prices. Selling pipe tobacco for RYO use decreases state and Federal revenue and also avoids regulations on flavored tobacco, banned descriptors, prohibitions on shipping, and reporting requirements
Molecular Diversity Preservation International (MDPI)
Publication date
01/03/2010
Field of study
This paper assesses the methodology employed in longitudinal studies of advertising and youth drinking and smoking behaviors. These studies often are given a causal interpretation in the psychology and public health literatures. Four issues are examined from the perspective of econometrics. First, specification and validation of empirical models. Second, empirical issues associated with measures of advertising receptivity and exposure. Third, potential endogeneity of receptivity and exposure variables. Fourth, sample selection bias in baseline and follow-up surveys. Longitudinal studies reviewed include 20 studies of youth drinking and 26 studies of youth smoking. Substantial shortcomings are found in the studies, which preclude a causal interpretation