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Does smoke cross the border? Cigarette tax avoidance in France

Author

Listed:
  • Christian Ben Lakhdar

    (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - CNRS - Centre National de la Recherche Scientifique, LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Nicolas Gérard Vaillant

    (ETHICS EA 7446 - Experience ; Technology & Human Interactions ; Care & Society : - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille, LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • François-Charles Wolff

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

Abstract
This paper examines the impact on cigarette sales of the successive increases in cigarette prices in France from 2002 to 2004. Since the price differential between France and neighboring countries increased over the period in question, cross-border purchases became more financially attractive for smokers living near borders. Results from difference-in-differences estimates indicate that the decrease in cigarette sales observed in French border departments was around 20 % higher from 2004 to 2007 compared to non-border departments. The loss of fiscal revenue due to cross-border shopping since the tax increase amounts to 2 billion euros over the period 2002–2007. Our findings highlight the need for improved coordination of policies aimed at reducing tobacco consumption across European Union countries.

Suggested Citation

  • Christian Ben Lakhdar & Nicolas Gérard Vaillant & François-Charles Wolff, 2015. "Does smoke cross the border? Cigarette tax avoidance in France," Post-Print hal-02514399, HAL.
    • Handle: RePEc:hal:journl:hal-02514399
    DOI: 10.1007/s10198-015-0746-1
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    References listed on IDEAS

    as
    1. Sijbren Cnossen, 2006. "Tobacco taxation in the European Union," CPB Discussion Paper 67, CPB Netherlands Bureau for Economic Policy Analysis.
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    6. Andrés Leal & Julio López-Laborda & Fernando Rodrigo, 2010. "Cross-Border Shopping: A Survey," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(2), pages 135-148, May.
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    10. David Merriman, 2010. "The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 61-84, May.
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    Cited by:

    1. Huynh, Dat & Sokolova, Anna & Tosun, Mehmet S., 2022. "Tax Elasticity of Border Sales: A Meta-Analysis," IZA Discussion Papers 15525, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Cigarette sales; Cross-border shopping; Difference-in-differences estimation;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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