The availability of lower-cost, tax-free cigarettes online undermines the public health benefit of raising cigarette taxes to curb smoking rates. Smokers living in states and cities with high cigarette excise taxes are more likely to purchase cigarettes online than smokers in low tax jurisdictions.
Decades of econometric studies have confirmed that raising cigarette prices effectively reduces smoking rates by motivating current smokers to quit, and deterring non-smokers from starting (U.S. DHHS, 2000; Zaza, 2005). The availability of lower-cost, tax-free cigarettes online undermines the public health benefit of raising cigarette taxes to curb smoking rates.
Studies show that increasingly more adult smokers in the U.S. are purchasing cigarettes online, with the proportion buying their cigarettes online more than doubling from 0.6% to 1.3% between 2002 and 2003 (Hyland, 2006). Studies using data from the National Cancer Institutes community intervention trial for smoking cessation (COMMIT) indicate that the percentage of people buying cigarettes online is higher in states with higher excise taxes (Hyland, Apr. 2005). In New Jersey, for example, rates increased from 1 percent in 2000 to almost 7 percent in 2002, most likely in response to New Jerseys cigarette excise tax increase in 2001 (Hrywna, 2004). After that states 2002 cigarette excise tax hike, the prevalence of adult smokers reporting ever having bought cigarettes online increased by more than 500 percent, and the prevalence of adult smokers reporting usually purchasing their cigarettes online increased by nearly 300 percent (Hrywna, 2004).
When cigarette prices increase, smokers who are not motivated to quit seek out cheaper prices. In the COMMIT study, 59 percent of smokers reported trying to avoid high cigarette prices. In a study of New York smokers, 68 percent who paid full price reported they had attempted to quit, compared to only 44 percent of smokers who paid lower-tax prices (Hyland, Jun. 2005). The International Tobacco Control Survey also found that purchasing cigarettes from low or untaxed sources decreases the likelihood of making a quit attempt (Hyland, 2006). Hrywna and colleagues (2003) found that smokers who buy cigarettes online are older, more addicted, and less likely to have attempted to quit in the past year. These studies confirm that Internet cigarette sales provide price-sensitive smokers with easy access to cheaper cigarettes. As a result, older, more addicted smokers who would benefit the most from quitting when prices increase, continue to smoke.