Using Littered Pack Data to Estimate Cigarette Tax Avoidance in NYC

43 Pages Posted: 21 Dec 2012

See all articles by David Merriman

David Merriman

University of Illinois at Chicago - Institute of Government and Public Affairs; Department of Public Administration

Howard Chernick

City University of New York, CUNY Hunter College - Department of Economics

Date Written: June 2011

Abstract

NYC has the highest cigarette tax rate in the nation. Using tax stamp data from littered packs of cigarettes from a sample of randomly selected NYC census tracts, collected once before and three times after a tax increase, we find that tax evasion is high relative to the U.S., but that the increase in avoidance after the tax increase is less than national estimates. Tax avoidance increased from 15 to 24 percent, while consumption declined by 10 percent. Rates of avoidance are higher in poorer areas. Revenue losses from untaxed smoking are estimated to be as much as half of the total revenue from cigarette taxation in NYC.

Keywords: tax evasion, interjurisdictional differentials, excise taxation, health and smoking

JEL Classification: H26, H73, H27, I18

Suggested Citation

Merriman, David and Chernick, Howard, Using Littered Pack Data to Estimate Cigarette Tax Avoidance in NYC (June 2011). Available at SSRN: https://ssrn.com/abstract=2192169 or http://dx.doi.org/10.2139/ssrn.2192169

David Merriman (Contact Author)

University of Illinois at Chicago - Institute of Government and Public Affairs

Chicago, IL 60607
United States

Department of Public Administration ( email )

400 S Peoria St.
2122 AEH (MC278)
Chicago, IL 60607
United States

Howard Chernick

City University of New York, CUNY Hunter College - Department of Economics ( email )

695 Park Avenue
New York, NY 10021
United States
212-772- 5440 (Phone)
212-772-5398 (Fax)

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