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Taxation and Product Pricing
Inexpensive 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.