Cigarette Tax Pass-Through by Product Characteristics: Evidence from Nielsen ScanTrack Data
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We use market-level scanner data collected from U.S. convenience stores in 2011 and
2012 to examine who bears the economic burden of cigarette taxes. We find cigarette
taxes are fully passed through to consumer prices, suggesting consumers pay all the
excess burden of these taxes. Tax incidence differs by class of cigarette; pass-through
rates for premium packs and cartons are higher than those for discount packs and cartons,
indicating possibilities of substitution in consumptions across tiers and brands.