Lessons learned from cigarette tax harmonisation in the European Union

Abstract

Yet, despite the effort to harmonise, the variation in cigarette taxes and prices between the EU member states is greater than, for example, that across states in the USA. The USA is a large internal market, but has little tobacco tax harmonisation and integration. The coefficient of variation (CV) for cigarette prices in the USA is 0.20 versus 0.44 in the EU, in 2010.1 This is likely due to US states being much more homogenous than the EU member states, particularly with respect to incomes. These differences may drive the price strategies of the tobacco industry, which have implications for the affordability of tobacco products.