Examining the Effects of Tax Increases on Discount and Premium Cigarettes in Canada, 2001-2005
Bibliographic record
Abstract
Rationale: Tax policy has been used as an instrument of health for many years. Since the late 1970's increased excise taxes and duties, at federal and provincial/territorial levels, have resulted in decreased demand and lower cigarette sales in Canada. Nevertheless, in recent years, Canadian cigarette manufacturers have introduced lower priced cigarette brands, known as discount brands, in response to a number of factors. The market share of discount cigarettes increased from 2% to over 40% between 2002 and 2005. This suggests that the magnitude of the effects of tax increases may not be as large as predicted by the literature. Objective: The objective of this paper is to determine the effect of tax changes on the overall demand for cigarettes, as well as the separate effects and on discount and premium cigarettes. Methods: The data employed in this paper include monthly wholesale cigarettes sales and prices, by brand, for each Canadian province, federal and provincial taxes per carton of cigarettes, and per-capita disposable income for 2002 to 2005. Three separate models were estimated - one model for overall cigarette sales, and separate models for discount and premium cigarette sales. Monthly cigarette sales were used as the dependant variable in each model with discount and premium cigarette prices, cigarette taxes, and disposable income as the independent variables. Due to provincial heterogeneity province was employed as a random effect in all three models. All variables were converted to logs allowing the coefficients to be interpreted as estimates of price elasticity. Results: The tax variable was significant in each equation. In the equations for overall cigarette sales and premium cigarette sales, taxes and quantities of cigarette sold were significant and inversely related. The tax elasticity in the overall market equation was -0.54, consistent with previous research, while in the regular cigarette market equation, the tax elasticity was -0.91. In other words, as taxes increased sales of premium cigarettes decreased at a faster rate than the market as a whole. Consistent with this result is the finding that tax elasticity on discount cigarettes was 1.37 implying that as taxes increased, sales of discount cigarettes also increased. Conclusions: These results provide further evidence that, in Canada, recent increases in taxes have resulted in smokers switching from regular priced cigarettes to discount priced cigarettes, thus mitigating the possible effects of tax increases. In addition, these results provide an indication of the magnitude of the impact of tax increases on smokers' behaviour.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.006 |
| Meta-epidemiology (narrow) | 0.001 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.001 | 0.004 |
| Science and technology studies | 0.002 | 0.001 |
| Scholarly communication | 0.001 | 0.001 |
| Open science | 0.002 | 0.001 |
| Research integrity | 0.001 | 0.001 |
| Insufficient payload (model declined to judge) | 0.003 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".