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. 2012;7(5):e36487.
doi: 10.1371/journal.pone.0036487. Epub 2012 May 2.

Fiscal and Policy Implications of Selling Pipe Tobacco for Roll-Your-Own Cigarettes in the United States

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Free PMC article

Fiscal and Policy Implications of Selling Pipe Tobacco for Roll-Your-Own Cigarettes in the United States

Daniel S Morris et al. PLoS One. .
Free PMC article

Abstract

Background: The Federal excise tax was increased for tobacco products on April 1, 2009. While excise tax rates prior to the increase were the same for roll-your-own (RYO) and pipe tobacco, the tax on pipe tobacco was $21.95 per pound less than the tax on RYO tobacco after the increase. Subsequently, tobacco manufacturers began labeling loose tobacco as pipe tobacco and marketing these products to RYO consumers at a lower price. Retailers refer to these products as "dual purpose" or "dual use" pipe tobacco.

Methods: Data on tobacco tax collections comes from the Alcohol and Tobacco Tax and Trade Bureau. Joinpoint software was used to identify changes in sales trends. Estimates were generated for the amount of pipe tobacco sold for RYO use and for Federal and state tax revenue lost through August 2011.

Results: Approximately 45 million pounds of pipe tobacco has been sold for RYO use from April 2009 to August 2011, lowering state and Federal revenue by over $1.3 billion.

Conclusions: Marketing pipe tobacco as "dual purpose" and selling it for RYO use provides an opportunity to avoid paying higher cigarette prices. This blunts the public health impact excise tax increases would otherwise have on reducing tobacco use through higher prices. Selling pipe tobacco for RYO use decreases state and Federal revenue and also avoids regulations on flavored tobacco, banned descriptors, prohibitions on shipping, and reporting requirements.

Conflict of interest statement

Competing Interests: The authors have read the journal's policy and have the following conflict: DM works for the Oregon Tobacco Prevention and Education Program and is paid in part with Measure 44 tobacco tax revenues. If the federal tobacco tax disparity between pipe and RYO tobacco were closed, tobacco-tax funded state programs like TPEP would see an increase in funding. This does not alter the authors' adherence to all the PLoS ONE policies on sharing data and materials.

Figures

Figure 1
Figure 1. Roll-your-own (RYO) and pipe tobacco sales in the United States, January 2007–August 2011.
This stacked area graph shows the total amount of loose tobacco (RYO and pipe tobacco) sales in the United States. The joinpoint fit line shows loose tobacco production was increasing by 15% annually prior to January 2009, mainly due to increases in RYO sales. Loose tobacco production dipped after the Federal tax increase was enacted, but only until the new tax rates went into effect in April 2009. Since April 2009, loose tobacco production has increased by 31% annually, twice as fast as before the tax was changed.

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