Tobacco taxes and illicit cigarette trade in Colombia

Juan M. Gallego, Blanca Llorente, Norman Maldonado, Susana Otálvaro-Ramírez, Paul Rodríguez-Lesmes

Research output: Contribution to journalArticlepeer-review

Abstract

This paper estimates the short-term impact of a twofold increase of the tobacco excise tax on consumption of illicit cigarette trade in Colombia. Using data collected before and after the tax increase from a novel smoker survey (DEICS-Col), the impact is estimated as the change in the probability that a smoker has illicit cigarettes. The methodology follows a difference-in-differences strategy, measuring the year-to-year variation of the proportion of illicit cigarettes between smokers who report buying low-priced cigarettes (the highest treatment intensity) and those who bought high-priced cigarettes (lowest treatment intensity). Estimations of the impact show an average increase of 4–5 percentage points on the proportion of illicit cigarettes relative to an initial penetration of low-priced illicit cigarettes of nearly 5.1 %.

Original languageEnglish (US)
Article number100902
JournalEconomics and Human Biology
Volume39
DOIs
StatePublished - Dec 2020

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)

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