How high taxes drive the illicit cigarette market - AEI"...the problem is that high taxes and hence high prices drive illicit markets.
My AEI colleagues Aparna Mathur and Cody Kallen and I published a paper today in the journal Applied Economics called “The Perverse Effect of Sin Taxes: The Rise of Illicit White Cigarettes”.
In it, we describe the widespread availability of illicit cigarettes and the risks they present, not only to public health and government revenue, but also in how they assist organized crime.
We specifically look at the fastest growing market, called illicit whites.
These are cigarettes that are legal in the country of production, but are illegally smuggled into other markets without the payment of applicable taxes..."
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