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I’ve read with interest Anna Gillmore’s article on tax rises on tobacco in
Poland, but I disagree on her visions about the future industrial
movements in the EU. There are two main reasons for it not being so:
first, as tobacco is an addictive substance consumers will still be
willing to pay for higher prices. This fact is clearly shown when looking
at tobacco’s price elasticity, which is on average about –0.4 in many high
income countries. Second, is the empirical fact recently seen in the US,
where to offset their economic liability after the Master Settlement
Agreement tobacco industries shifted in full a USD 0.45 price increase to
consumers.
Yours sincerely,
Competing interests:
None declared
Competing interests:
No competing interests
24 October 2003
Oriol Sola-Morales
Senior Researcher
Catalan Agency for Health Tecnology Assessment and Research (CAHTA); Barcelona, 08023 Spain
Tobacco prices will not fall in response to tax rises
Sir,
I’ve read with interest Anna Gillmore’s article on tax rises on tobacco in
Poland, but I disagree on her visions about the future industrial
movements in the EU. There are two main reasons for it not being so:
first, as tobacco is an addictive substance consumers will still be
willing to pay for higher prices. This fact is clearly shown when looking
at tobacco’s price elasticity, which is on average about –0.4 in many high
income countries. Second, is the empirical fact recently seen in the US,
where to offset their economic liability after the Master Settlement
Agreement tobacco industries shifted in full a USD 0.45 price increase to
consumers.
Yours sincerely,
Competing interests:
None declared
Competing interests: No competing interests