TY - JOUR AU - Chaloupka,Frank J., IV AU - Peck,Richard AU - Tauras,John A. AU - Xu,Xin AU - Yurekli,Ayda TI - Cigarette Excise Taxation: The Impact of Tax Structure on Prices, Revenues, and Cigarette Smoking JF - National Bureau of Economic Research Working Paper Series VL - No. 16287 PY - 2010 Y2 - August 2010 DO - 10.3386/w16287 UR - http://www.nber.org/papers/w16287 L1 - http://www.nber.org/papers/w16287.pdf N1 - Author contact info: Frank J. Chaloupka, IV University of Illinois at Chicago Department of Economics (m/c 144) College of Liberal Arts and Sciences 601 S. Morgan Street, Room 713 Chicago, IL 60607-7121 Tel: 312/413-2287 Fax: 312/996-3344;630/801-8870 E-Mail: fjc@uic.edu Richard Peck University of Illinois at Chicago Department of Economics (m/c 144) College of Liberal Arts and Sciences 601 S. Morgan Street, Room 726 Chicago, IL 60607 E-Mail: rmpeck@uic.edu John A. Tauras University of Illinois at Chicago Department of Economics (m/c 144) College of Liberal Arts and Sciences 601 S. Morgan Street, Room 707 Chicago, IL 60607 Tel: 312/413-3289 Fax: 312/996-3344 E-Mail: tauras@uic.edu Xin Xu Institute of Health Research and Policy University of Illinois at Chicago E-Mail: xxu11@uic.edu Ayda Yurekli Avenue Appia, 20 1211 Geneva 27 Switzerland E-Mail: yureklia@who.int AB - The main purpose of this study is to provide empirical evidence on the effects of the cigarette excise tax structure on three outcomes: cigarette prices, government revenues, and cigarette consumption. We composed cross-sectional time-series data for 21 EU countries from year 1998 to 2007 from various data resources. We provide strong evidence that the price gap between premium and low-priced brands is larger in countries with a greater share of ad valorem tax. A 10-percent raise in the share of ad valorem tax in total excise tax leads to about a 4 to 5 percent increase in the price gap, with a smaller impact in more concentrated markets. Our estimates confirm that greater instability of government tax revenues from cigarette excise taxes can be attributed to greater reliance on the ad valorem tax and such instability increases with the growth of manufacturers' market power. We also find that greater reliance on a specific tax has greater impact on cigarette smoking, but the impact diminishes with the growth of manufacturers' market power. ER -