Tax avoidance and evasion: Cigarette purchases from Indian reservations among US adult smokers, 2010-2011

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Abstract

Excise taxes are the primary public health strategy used to increase the price of cigarettes in the United States. Rather than quitting or reducing consumption of cigarettes, some price-sensitive smokers may avoid state and local excise taxes by purchasing cigarettes from Indian reservations. The objectives of this study were to (1) provide the most recent state-specific prevalence of purchases made on Indian reservations by non–American Indians/Alaska Natives (non-AI/ANs) and (2) assess the impact of these purchases on state tax revenues. We used data from a large national and state-representative survey, the 2010-2011 Tobacco Use Supplement to the Current Population Survey, which collects self-reported measures on cigarette use and purchases. Nationwide, 3.8% of non-AI/AN smokers reported purchasing cigarettes from Indian reservations. However, in Arizona, Nevada, New Mexico, New York, Oklahoma, and Washington State, about 15% to 30% of smokers reported making such purchases, resulting in annual tax revenue losses ranging from $3.5 million (Washington State) to $292 million (New York) during 2010-2011. Strategies to reduce the sale of non- or lower-taxed cigarettes to non-AI/ANs on Indian reservations have the potential to decrease smoking prevalence and recoup lost revenue from purchases made on reservations.

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Wang, X., Xu, X., Tynan, M. A., Gerzoff, R. B., Caraballo, R. S., & Promoff, G. R. (2017). Tax avoidance and evasion: Cigarette purchases from Indian reservations among US adult smokers, 2010-2011. Public Health Reports, 132(3), 304–308. https://doi.org/10.1177/0033354917703653

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