Does smoke cross the border? Cigarette tax avoidance in France

Christian Ben Lakhdar (), Nicolas Vaillant () and François-Charles Wolff

The European Journal of Health Economics, 2016, vol. 17, issue 9, No 3, 1073-1089

Abstract: Abstract This paper examines the impact on cigarette sales of the successive increases in cigarette prices in France from 2002 to 2004. Since the price differential between France and neighboring countries increased over the period in question, cross-border purchases became more financially attractive for smokers living near borders. Results from difference-in-differences estimates indicate that the decrease in cigarette sales observed in French border departments was around 20 % higher from 2004 to 2007 compared to non-border departments. The loss of fiscal revenue due to cross-border shopping since the tax increase amounts to 2 billion euros over the period 2002–2007. Our findings highlight the need for improved coordination of policies aimed at reducing tobacco consumption across European Union countries.

Keywords: Cigarette sales; Cross-border shopping; Difference-in-differences estimation (search for similar items in EconPapers)
JEL-codes: H26 I18 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10198-015-0746-1

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