Tax incidence for menthol cigarettes by race: Evidence from Nielsen Homescan data

Hyunchul Kim and Dongwon Lee

Journal of Health Economics, 2023, vol. 92, issue C

Abstract: We use Nielsen Homescan data to examine whether the incidence of cigarette taxes on menthol products varies with race. We find that taxes are shifted at significantly lower rates to Black smokers of menthol cigarettes than any other smokers. One possible explanation is that the industry targets price promotions to Black menthol smokers because they tend to be more responsive to cigarette prices relative to other smokers. We find evidence that Black smokers receive significantly more price discounts for menthol products than white menthol smokers. Our findings indicate that increasing cigarette taxes would effectively reduce menthol smoking among Black Americans because tax pass-through rate for Black menthol smokers is still substantially above zero.

Keywords: Tax incidence; Cigarette tax; Menthol cigarettes; Race; Scanner data (search for similar items in EconPapers)
JEL-codes: H22 H31 H71 J15 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:92:y:2023:i:c:s0167629623001066

DOI: 10.1016/j.jhealeco.2023.102829

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