Continued implications of taxing roll-your-own tobacco as pipe tobacco in the USA

Michael A. Tynan, Daniel Morris, Tara Weston

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

Background In 2009, a US$21.95 per pound disparity was created in the Federal excise tax between roll-yourown cigarette tobacco (RYO) and pipe tobacco in the USA. After this disparity was created, pipe tobacco sales increased and RYO sales declined as some manufacturers repackaged roll-your-own tobacco as pipe tobacco and retailers began to offer cigarette rolling machines for consumers to use. A Federal law was passed in 2012 limiting the availability of these machines, however, it was unclear what impact this law had on the sales of roll-your-own tobacco labelled as pipe tobacco. Methods The quantity of RYO sold as pipe tobacco each month was estimated using objective data on Federal excise taxes. Results From April 2009 through June 2013, 107 million pounds of RYO were sold as pipe tobacco, reducing Federal excise tax collections by US$2.36 billion. The amount of RYO taxed as pipe tobacco climbed steadily and then levelled off following the July 2012 Federal law. Conclusions The Federal law did not correct the market shift that occurred in pipe and RYO sales beginning in 2009. Even without access to commercial rolling machines, smokers are continuing to take advantage of the tax disparity. Without a solution, states will continue to lose revenue, and smokers who would otherwise quit will continue to have a low-cost alternative product available for purchase. Potential solutions include: (1) US Treasury Department distinguishing between RYO and pipe tobacco based on physical characteristics and (2) changing the Federal excise tax so that RYO and pipe tobacco are taxed at the same rate.

Original languageEnglish (US)
Pages (from-to)e125-e127
JournalTobacco Control
Volume24
Issue numberE2
DOIs
StatePublished - Jun 1 2015
Externally publishedYes

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nicotine
Tobacco
taxes
sales
federal law
Taxes
Tobacco Products
purchase
revenue
Costs and Cost Analysis
Law
market

ASJC Scopus subject areas

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

Cite this

Continued implications of taxing roll-your-own tobacco as pipe tobacco in the USA. / Tynan, Michael A.; Morris, Daniel; Weston, Tara.

In: Tobacco Control, Vol. 24, No. E2, 01.06.2015, p. e125-e127.

Research output: Contribution to journalArticle

Tynan, Michael A. ; Morris, Daniel ; Weston, Tara. / Continued implications of taxing roll-your-own tobacco as pipe tobacco in the USA. In: Tobacco Control. 2015 ; Vol. 24, No. E2. pp. e125-e127.
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N2 - Background In 2009, a US$21.95 per pound disparity was created in the Federal excise tax between roll-yourown cigarette tobacco (RYO) and pipe tobacco in the USA. After this disparity was created, pipe tobacco sales increased and RYO sales declined as some manufacturers repackaged roll-your-own tobacco as pipe tobacco and retailers began to offer cigarette rolling machines for consumers to use. A Federal law was passed in 2012 limiting the availability of these machines, however, it was unclear what impact this law had on the sales of roll-your-own tobacco labelled as pipe tobacco. Methods The quantity of RYO sold as pipe tobacco each month was estimated using objective data on Federal excise taxes. Results From April 2009 through June 2013, 107 million pounds of RYO were sold as pipe tobacco, reducing Federal excise tax collections by US$2.36 billion. The amount of RYO taxed as pipe tobacco climbed steadily and then levelled off following the July 2012 Federal law. Conclusions The Federal law did not correct the market shift that occurred in pipe and RYO sales beginning in 2009. Even without access to commercial rolling machines, smokers are continuing to take advantage of the tax disparity. Without a solution, states will continue to lose revenue, and smokers who would otherwise quit will continue to have a low-cost alternative product available for purchase. Potential solutions include: (1) US Treasury Department distinguishing between RYO and pipe tobacco based on physical characteristics and (2) changing the Federal excise tax so that RYO and pipe tobacco are taxed at the same rate.

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