Working Paper: NBER ID: w22577
Authors: Shu Wang; David Merriman; Frank J. Chaloupka
Abstract: We analyze data about cigarette tax compliance from the first national scale littered cigarette packs collection. We code each pack based on whether an appropriate tax had been paid at the location where it was found. Noncompliance across our 132 sample communities ranges from zero to one hundred percent with an appropriately weighted mean of 21 percent. We provide evidence that noncompliance is due to both cross-border shopping and cigarette trafficking. OLS and binomial logit regressions demonstrate that the financial incentive for non-compliance is the most important explanatory variable and has a statistically and quantitatively significant impact on noncompliance.
Keywords: Cigarette Tax Compliance; Tax Noncompliance; Cross-Border Shopping; Cigarette Trafficking
JEL Codes: H26; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax differential (H29) | tax noncompliance (H26) |
| financial incentive for tax noncompliance (ifnc) (H26) | tax noncompliance (H26) |
| median household income (D31) | tax noncompliance (H26) |
| population density (J11) | tax noncompliance (H26) |