Canada Research Chair in Public Economics
Tier 2 - 2010-07-01
RESEARCH INVOLVESStudying the economic issues of smoking, within public and health economics.
RESEARCH RELEVANCEThis research will examine how smuggling affects policy and how cross-border pricing differences, induced by policy, impel smuggling.
SMOKING OUT THE IMPACT OF CIGARETTE TAX POLICY AND PRICINGThe goal behind increasing taxes on cigarettes is to reduce the prevalence of smoking and its costly and negative health effects. However, different prices in cigarettes across borders, often due to different tax regimes, can lead to casual smuggling—smokers buying cigarettes in lower-priced areas to avoid higher cigarette taxes at home.
This tax-avoidance behaviour, in turn, may undermine the effectiveness of cigarette taxation in reducing smoking. Dr. Philip DeCicca, Canada Research Chair in Public Economics, will use new data—including prices and where smokers made their purchases—from United States and Canadian sources to provide a detailed picture of casual smuggling.
DeCicca’s research will be among the first to examine this behaviour directly, by providing an in-depth understanding of how tax policy and different tax regimes influence such behaviour.
As a specialist in economic policy analysis, DeCicca has a history of performing tobacco-related research, including studies on youth initiation into smoking, anti-smoking sentiment, and how taxes affect adult smoking. For example, he discovered that, while higher taxes on cigarettes cut down smoking, they also lead to higher food consumption and, thus, more, adult obesity.
The findings of DeCicca’s research will have implications for cigarette tax policy, and offer solutions for a more co-ordinated approach to cigarette taxation.