- FAMRI Center
No surprise: In anticipation of ALA report, tobacco industry ally claims massive cigarette smuggling due to cigarette taxes
It’s just like clockwork. A few days before an important public health report that could damage the tobacco companies is due to be released, a “new” report pops up in the press designed to discredit or deflect the upcoming report.
This time the important public health report is the American Lung Association’s annual State of Tobacco Control, due to be released on Wednesady, January 16. This report, which grades the federal government and the states on a range of tobacco control policies, including tobacco taxes, tobacco control program funding, smokefree air, and cessation funding, almost always generates media and public attention.
That’s why it is not surprising that on January 8, the Mackinac Center, a right-wing think tank in Michigan with a long history of supporting the tobacco companies’ opposition to tobacco tax increases, posted a comment on its web site claiming that “Higher Cigarette Taxes Create Lucrative, Dangerous Black Market.” They even provided a chart showing state-by-state estimates of the smuggling, which was uncritically reported by the Sacramento Bee here in California.
Not surprisingly, the tobacco companies have financed Mackinac since at least the 1990s (for example, see money for 1995, 1996, 1997, and 1999), so one needs to consider the source when assessing Mackinac’s policy pronouncements.
There are two fundamental assumptions, buried on pages 73 and 74 in an appendix, in the original 2008 Mackinac report that the current claims are based on:
- Under-reporting of smoking prevalence is not a major concern for our study and any changes in the rate of under-reporting varies identically across all states and follows a linear trend.
- Smoking intensity does not vary across states and that it trends linearly through time.
Based on these two assumptions Mackinac uses the reported smoking prevalence and reported taxable sales to estimate what the differences are state-by-state, then attributes these differences to smuggling into or out of the states.
The reality is that both of these assumptions are wrong. The fact that people under-report smoking behavior is well established by comparing reported smoking behavior with objective measures of nicotine intake (using cotinine, a biomarker of nicotine; see for, example, some of these papers). In addition, there are wide variations in the number of cigarettes smoked per capita across states. (Mackinac could have looked up the numbers in Table 3 in Cigarette Smoking Prevalence and Policies in 50 States or computed it from Table 11 in the industry’s Tax Burden on Tobacco instead of assuming these differences away.)
Indeed, as in other areas the industry’s public statements about smuggling contradict what they are saying in private inside the companies.
This is not to say that there are no cross-border sales of cigarettes in the United States; there are. In California they amount to a few percent of consumption, way below the 36% Mackinac claims.
But, then, the tobacco companies and their paid apologists have never been about accuracy. It is all about protecting the companies’ profits, in this case almost certainly by trying to diffuse the implications for increasing the tobacco tax that will follow from upcoming report from the American Lung Association.