Evidence From a Quasi-Experiment in Spain

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Evidence From a Quasi-Experiment in Spain

Notapor Anthony » 08 Nov 2013, 22:19


Will the European Union’s New Tobacco Tax Legislation Lead to Reductions in Smoking Prevalence? Evidence From a Quasi-Experiment in Spain:

Results: Under the minimum tax regime, prices increased three times faster in the treatment territory. However, the new regime did not affect smoking prevalence among males, either shortly after its enactment or 3 years hence. For women, we find no significant effects on prevalence in the short run, and point estimates ranging between −3.36% and −4.3% 3 years hence, although only one of these is statistically significant.
Conclusions: The new tax regime affected cigarette prices in the intended direction. However, we find only weak evidence for a reduction in prevalence among women. The availability of cheap, fine-cut tobacco appears to be the most likely cause for the poor results in terms of smoking prevalence. EU member states that have introduced a minimum tax on manufactured cigarettes might achieve little in terms of reductions in smoking prevalence if they allow a tax gap between fine-cut tobacco and manufactured cigarettes. In this sense, it is unfortunate that EU legislation consecrates a differential treatment for the two products.

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