Social and Behavioral Sciences Commons^™

Tax Evasion And Illicit Cigarettes In California: Prevalence And Demand-Side Correlates, James Prieger

School of Public Policy Working Papers

Unlike some areas of crime, participation in illicit tobacco markets is not rare and spans most sociodemographic groups. Measurement of the scale of illicit trade in cigarettes usually are for markets with recently increased (or continually increasing) excise taxes. This study examines survey data from adult cigarette smokers in California at a time when prices and taxes had been fairly stable for many years. Even with no recent price shocks in the market, the results indicate that one-third of cigarette packs may lack a valid tax stamp and that between 18% to 25% of smokers avoided taxes by bringing cigarettes …