Fiscal and policy implications of selling pipe tobacco for roll-your-own cigarettes in the United States

Daniel Morris, Michael A. Tynan

Research output: Contribution to journalArticle

17 Citations (Scopus)

Abstract

Background: 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 $21.95 per pound less than the tax on RYO tobacco after the increase. Subsequently, tobacco manufacturers began labeling loose tobacco as pipe tobacco and marketing these products to RYO consumers at a lower price. Retailers refer to these products as "dual purpose" or "dual use" pipe tobacco. Methods: Data on tobacco tax collections comes from the Alcohol and Tobacco Tax and Trade Bureau. Joinpoint software was used to identify changes in sales trends. Estimates were generated for the amount of pipe tobacco sold for RYO use and for Federal and state tax revenue lost through August 2011. Results: Approximately 45 million pounds of pipe tobacco has been sold for RYO use from April 2009 to August 2011, lowering state and Federal revenue by over $1.3 billion. Conclusions: 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.

Original languageEnglish (US)
Article numbere36487
JournalPLoS One
Volume7
Issue number5
DOIs
StatePublished - May 2 2012

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Tobacco
cigarettes
pipes
Tobacco Products
excise tax
Sales
tobacco
Pipe
Taxation
Taxes
income
Tobacco Use
taxes
Marketing
marketing
Fiscal Policy
tobacco use
shipping
sales
Public health

ASJC Scopus subject areas

  • Agricultural and Biological Sciences(all)
  • Biochemistry, Genetics and Molecular Biology(all)
  • Medicine(all)

Cite this

Fiscal and policy implications of selling pipe tobacco for roll-your-own cigarettes in the United States. / Morris, Daniel; Tynan, Michael A.

In: PLoS One, Vol. 7, No. 5, e36487, 02.05.2012.

Research output: Contribution to journalArticle

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