Taxation and Product Pricing
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Inexpensive commercial tobacco products increase rates of tobacco use, particularly among young adults and minors. Tobacco manufacturers exploit the appeal of these products by using coupons and other price-related incentives to market them. In response, many states have raised excise taxes on cigarettes and othertobacco products to increase their prices and make these products less attractive to consumers.
Raising tobacco taxes has proven to be the most effective way to decrease tobacco use in the U.S. Through price-related marketing strategies, tobacco manufacturers can exploit the price sensitivity of users and potential users, as well as dampen the effects of tobacco taxes. These strategies often promote sales of specific brands, sales in specific geographic locations and sales among particular groups of people. For this reason, state and local governments may wish to consider other price-related regulations in addition to taxes. States and localities have broad legal authority to regulate the distribution of tobacco products, which includes the regulation of price-related marketing strategies.
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In addition to supporting the imposition of higher tobacco taxes, tobacco control advocates should also promote tobacco tax equity, to ensure that other tobacco products are taxed at rates similar to those imposed on cigarettes.
Pricing strategies are an effective way to combat tobacco use. Such pricing strategies include laws and regulations establishing minimum prices, restricting the use of coupons, prohibiting the distribution of free samples, and limiting price discounts, giveaways, and retail value-added schemes (like “buy-one-get-one” free offers).
Updated overview of policy approaches for eliminating tobacco product discounting schemes – specifically tobacco product coupons and value-added promotions such as multi-pack offers.