Tax Evasion and Illicit Cigarettes in California: Part II – Smokers’ Intended Responses to a Tax Increase

40 Pages Posted: 31 May 2018

See all articles by James E. Prieger

James E. Prieger

Pepperdine University - School of Public Policy

Jonathan Kulick

Marron Institute

Date Written: May 19, 2018

Abstract

We examine recent survey data from California to investigate smokers’ intended responses to an increase in cigarette excise taxes rates, including tax avoidance and the economic crimes of tax evasion and illicit trade in tobacco products (ITTP). We estimate how tax avoidance, tax evasion, and ITTP might change in response to a recent tax increase. We examine how such intended behaviors vary across demographic groups and how they are related to factors pertaining to the cost of engaging in ITTP. Half of smokers intend to act in ways that undermine, at least partially, the public health rationale for raising tobacco taxes. On the other hand, 73.5% intend to reduce their nicotine use or substitute the use of less harmful delivery systems for cigarette smoking.

Keywords: tax evasion, tax avoidance, ITTP, illicit trade, black markets, excise taxation, tobacco, counterfeits

JEL Classification: H26, I18, K42

Suggested Citation

Prieger, James E. and Kulick, Jonathan, Tax Evasion and Illicit Cigarettes in California: Part II – Smokers’ Intended Responses to a Tax Increase (May 19, 2018). Available at SSRN: https://ssrn.com/abstract=3181617 or http://dx.doi.org/10.2139/ssrn.3181617

James E. Prieger (Contact Author)

Pepperdine University - School of Public Policy ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States
3105067150 (Phone)
3105067494 (Fax)

HOME PAGE: http://sites.google.com/a/pepperdine.edu/jprieger/

Jonathan Kulick

Marron Institute ( email )

196 Mercer St.
New York, NY 10012
United States

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