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Does smoke cross the border? Cigarette tax avoidance in France

Listed author(s):
  • Christian Ben Lakhdar

    ()

    (Université de Lille)

  • Nicolas Gérard Vaillant

    ()

    (Université Catholique de Lille (Laboratoire d’Anthropologie Expérimentale and ISTC Strategies and Communication))

  • François-Charles Wolff

    ()

    (LEMNA, Université de Nantes
    Institut national d’études démographiques (INED))

Abstract This paper examines the impact on cigarette sales of the successive increases in cigarette prices in France from 2002 to 2004. Since the price differential between France and neighboring countries increased over the period in question, cross-border purchases became more financially attractive for smokers living near borders. Results from difference-in-differences estimates indicate that the decrease in cigarette sales observed in French border departments was around 20 % higher from 2004 to 2007 compared to non-border departments. The loss of fiscal revenue due to cross-border shopping since the tax increase amounts to 2 billion euros over the period 2002–2007. Our findings highlight the need for improved coordination of policies aimed at reducing tobacco consumption across European Union countries.

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File URL: http://link.springer.com/10.1007/s10198-015-0746-1
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Article provided by Springer & Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ) in its journal The European Journal of Health Economics.

Volume (Year): 17 (2016)
Issue (Month): 9 (December)
Pages: 1073-1089

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Handle: RePEc:spr:eujhec:v:17:y:2016:i:9:d:10.1007_s10198-015-0746-1
DOI: 10.1007/s10198-015-0746-1
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  1. Sijbren Cnossen, 2006. "Tobacco taxation in the European Union," CPB Discussion Paper 67, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Ayda A. Yurekli & Ping Zhang, 2000. "The impact of clean indoor-air laws and cigarette smuggling on demand for cigarettes: an empirical model," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 159-170.
  3. Beatty, Timothy K.M. & Larsen, Erling Røed & Sommervoll, Dag Einar, 2009. "Driven to drink: Sin taxes near a border," Journal of Health Economics, Elsevier, vol. 28(6), pages 1175-1184, December.
  4. Lovenheim, Michael F., 2008. "How Far to the Border?: The Extent and Impact of Cross-Border Casual Cigarette Smuggling," National Tax Journal, National Tax Association, vol. 61(1), pages 7-33, March.
  5. Andrés Leal & Julio López-Laborda & Fernando Rodrigo, 2010. "Cross-Border Shopping: A Survey," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(2), pages 135-148, May.
  6. Stehr, Mark, 2005. "Cigarette tax avoidance and evasion," Journal of Health Economics, Elsevier, vol. 24(2), pages 277-297, March.
  7. Coats, R. Morris, 1995. "A Note on Estimating Cross-Border Effects of State Cigarette Taxes," National Tax Journal, National Tax Association, vol. 48(4), pages 573-84, December.
  8. Austan Goolsbee & Michael F. Lovenheim & Joel Slemrod, 2010. "Playing with Fire: Cigarettes, Taxes, and Competition from the Internet," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 131-154, February.
  9. David Merriman, 2010. "The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 61-84, May.
  10. DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
  11. R.Andrew Luccasen & R. Morris Coats & G. Karahan, 2005. "Cigarette smuggling mitigates the public health benefits of cigarette taxes," Applied Economics Letters, Taylor & Francis Journals, vol. 12(12), pages 769-773.
  12. Coats, R. Morris, 1995. "A Note on Estimating Cross-Border Effects of State Cigarette Taxes," National Tax Journal, National Tax Association, vol. 48(4), pages 573-584, December.
  13. Ben Lockwood & Giuseppe Migali, 2009. "Did The Single Market Cause Competition in Excise Taxes? Evidence From EU Countries," Economic Journal, Royal Economic Society, vol. 119(536), pages 406-429, 03.
  14. Gary Solon & Steven J. Haider & Jeffrey M. Wooldridge, 2015. "What Are We Weighting For?," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 301-316.
  15. Ballard, Charles L. & Lee, Jaimin, 2007. "Internet Purchases, Cross-Border Shopping, and Sales Taxes," National Tax Journal, National Tax Association, vol. 60(4), pages 711-725, December.
  16. Nicolas Gérard Vaillant & Christian Ben lakhdar & Thérèse Lebrun, 2011. "On the way of tobacco quitting: A VAR approach," Economics Bulletin, AccessEcon, vol. 31(4), pages 3253-3258.
  17. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-892, September.
  18. Sijbren Cnossen, 2006. "Tobacco Taxation in the European Union," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(2), pages 305-322, June.
  19. repec:kap:iaecre:v:16:y:2010:i:2:p:135-148 is not listed on IDEAS
  20. Sijbren Cnossen, 2006. "Tobacco Taxation in the European Union," CESifo Working Paper Series 1718, CESifo Group Munich.
  21. Magali Barbieri, 2013. "La mortalité départementale en France," Population (french edition), Institut National d'Études Démographiques (INED), vol. 68(3), pages 433-479.
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