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Penalty:
Provisions[edit]
Section 3. Prohibited Acts, The following acts are declared unlawful and prohibited;
(a) Smoking within enclosed public places conveyances, whether stationary or in motion,
except in DSAs fully compliant with the requirements of Section 4 of his Order;
(b) For persons-in-charge to allow, abet or tolerate smoking in places enumerated in the
preceding paragraph, outside of DSAs fully compliant with Section 4 of this Order;
(c) For any person to sell, distribute or purchase tobacco products to and from minors. It
shall not be a defense for the person selling or distributing that he/she did not know or was
not aware of the real age of the minor. Neither shall it be a defense that he/she did not know
nor had any reason to believe that the cigarette or any other tobacco product was for the
consumption of the minor to whom it was sold;
(d) For a minor to smoke, sell or buy cigarettes or any tobacco products;
(e) Ordering, instructing or compelling a minor to use, light up, buy, sell, distribute, deliver,
advertise or promote tobacco products;
(f) Selling or distributing tobacco products in a school, public playground, youth hostels and
recreational facilities for minors, including those frequented by minors, or within 100 meters
from any point of the perimeter of these places;
(g) Placing, posting, displaying or distributing advertisement and promotional materials of
tobacco products, such as but not limited to leaflets, posters, display structures and other
materials within 100 meters from the perimeter of a school, public playground, and other
facilities frequented particularly by minors, hostel and recreational facilities for minors,
including those frequented by them, or in an establishment when such establishments or its
location is prohibited from selling tobacco products.
(h) Placing any form of tobacco advertisement outside of the premises of point-of-sale retail
establishments; and
(i) Placing any stall, booth, and other displays concerning tobacco promotions to areas
outside the premises of point-of-sale locations or adult-only facilities.
The order restricts and penalizes the act of smoking tobacco products in enclosed public
places and public conveyances, whether stationary or in motion, except in certain
designated smoking areas. It requires that all public buildings or places that are accessible
or open to the public regardless of ownership or right to access must be smoke-free inside
and within 10 meters (33 ft) from entrances and exits or where people pass or congregate,
and from air intake ducts. This includes but is not limited to: [1]
Government buildings
Schools, colleges and universities
Offices and other workplaces
Restaurants and other food and drink establishments
Hotels and other accommodation facilities
Hospitals, health centers, clinics and nursing homes
Transportation terminals
Churches
Shopping centers, retail stores and other merchandise establishments
Entertainment establishments
Sports venues
Other establishments that provide professional services
Public conveyances include buses and jeepneys, taxicabs, tricycles and other public utility
vehicles, rail transit, airplanes and ships. The order also prohibits smoking in all outdoor
spaces where people gather such as parks, playgrounds, sidewalks, waiting areas, open-air
markets and resorts.[1]
The order also covers existing bans on the sale, distribution and purchase of tobacco
products to and from minors, or persons below 18 years old, as well as the restrictions on
cigarette advertisements and promotions under the Tobacco Regulation Act. [4] It also
instructs all local government units to form a "Smoke Free Task Force" to help enforce its
provisions.[6]
Penalties[edit]
The order imposes fines of up to ₱10,000 (US$200) for violation of the smoking ban in
public places as prescribed in section 32 of the Tobacco Regulation Act.[3][7] Enforcement
can be performed by members of the Philippine National Police and the local task forces of
each city and municipality.[1]
DSAs shall have a combined area and buffer zone not larger than 20 percent of the total
floor area of the building but not smaller than 10 meters (33 ft)
DSAs shall have no opening that will allow air to escape to the smoke-free area of the
building or conveyance
DSAs shall have a ventilation system independent of other ventilation systems servicing
the rest of the building or conveyance
DSAs shall prominently display a "Smoking Area" signage, graphic health warnings, and
prohibition on the entry of persons below 18 years old
There shall only be one DSA per building or conveyance
The order also stipulates that no designated smoking areas shall be installed in all centers
of youth activity such as playschools, preparatory schools, elementary schools, high
schools, colleges and universities, youth hostels and recreational facilities for minors;
elevators and stairwells; fire-hazard locations such as gas stations and storage areas for
flammable liquids, gas, explosives or combustible materials; hospitals, health centers,
medical, dental and optical clinics, nursing homes, dispensaries and laboratories; and food
preparation areas.[2][1]
MALACAÑAN PALACE
MANILA
WHEREAS, the 1987 Constitution of the Republic of the Philippines declares that the State
shall protect and promote the right to health of the people and install health consciousness
among them;
WHERESAS, the Republic of the Philippines, under the world Health Organization
Framework Convention on Tobacco Control (FCTC) to which it is a Party, being determined
to give priority to the right to protect public health and the promote measures of tobacco
control based on current and relevant scientific, technical and economic considerations,
agreed to implement the measures provided in that treaty;
WHEREAS, in pursuit of the policy of the State to guarantee the enjoyment of the right of
every citizen to breathe clean air, Republic Act No. 8749, or the Philippine Clean Air Act of
1999, prohibits smoking inside enclosed public places including public vehicles and other
means of transport, and other enclosed areas, and directs local government units to
implement the prohibition;
WHEREAS, Republic Act No. 9211, or the Tobacco Regulation Act of 2003, prohibits
smoking in certain public places, and prohibits the purchases and sale of cigarettes and
other tobacco products to and by minors and in certain places frequented by minors and
provides penalties for any violation of the prohibitions;
WHEREAS, public health takes precedence over any commercial or business interest;
WHEREAS, an increasing number of Filipinos become afflicted with and die each year of
tobacco-related diseases such as stroke, heart disease, emphysema, various cancers and
nicotine addiction, and both the public and workers in facilities where smoking is allowed
are most risk from these other tobacco-related diseases;
WHEREAS, the FCTC provides that each Party shall adopt and implement in areas of
existing national jurisdiction as determined by national law, and actively promote at other
jurisdictional levels, the adoption and implementation of effective legislative, executive,
administrative and/or other measures, providing fro protection from exposure to tobacco
smoke in indoor workplaces, public transport, indoor public places and, as appropriate,
other public places;
SECTION 1. Definition. For the purpose of this Executive Order, the following terms shall
mean:
(c) "Enclosed" means being covered by a roof or other structure serving the purpose
of a roof, and having one or more walls or sides, wherein the openings on the walls
or sides have an aggregate area that is less than half of the total space, regardless
of the type of material used for the roof, wall or sides, and regardless of whether the
structure is permanent or temporary. Doors and windows that can be opened and
shut shall not be considered as opening under this paragraph. The enclosed
character of a building or conveyance shall attach to all its areas, including its open
spaces.
(e) "Non-Smoking Buffer Zone" is a ventilated area between the door of a DSA not
located in open space and the smoke free-area. There shall be no opening that will
allow air to scape from such Non-Smoking Zone to the smoke-free area, except for a
single door equipped with an automatic door closer. Such door is distinct from the
door of the DSA, which shall be at least two (2) meters away from the other.
(f) "Open spaces" refers to those areas forming part of a building or conveyance,
which are not covered by a roof or similar structure.
(j) "Public places" means all places, fixed or mobile, that are accessible or open to
he public or places for collective use, regardless of ownership or right to access,
including but not limited to, schools, workplaces, government facilities, establishment
that provide food and drinks, accommodation, merchandise, professional services,
entertainment or other services. It also includes outdoor spaces where facilities are
available for the public or where a crowd of people would gather, such as, but not
limited to, playgrounds, sports ground or centers, church grounds, health/hospital
compounds, transportation terminals, market, parks, resorts, walkways/sideways,
entrance ways, waiting areas, and the line.
(k) "Smoke-Free" refers to air that is 100% free from tobacco smoke. This Definitions
includes, But is not limited to, air in which tobacco smoke control cannot be seen,
smelled, sensed or measured.
(m) "Tobacco Products" means products entirely or partly made of tobacco leaf as
raw material which are manufactured to be used for smoking, sucking, chewing or
snuffing, such as but not limited to cigarette, cigar, pipe, shisha/hookah and chew
tobacco.
(n) "Workplace" means any place used by people during their employment or work,
whether done for compensation or voluntarily, including all attached or associated
places commonly used by the workers in the course of their work (for example,
corridors, elevators, stairwells, toilets, lobbies, lounges). Vehicles used in the course
of work are considered workplaces, such as, but not limited to taxis, ambulances and
delivery vehicles.
SECTION 2. Coverage. This Order shall apply to all persons, whether resident or not, and
in all places, found within the territorial jurisdiction of the Philippines.
SECTION 3. Prohibited Acts, The following acts are declared unlawful and prohibited;
(d) For a minor to smoke, sell or buy cigarettes or any tobacco products;
(e) Ordering, instructing or compelling a minor to use, light up, buy, sell, distribute,
deliver, advertise or promote tobacco products;
(h) Placing any form of tobacco advertisement outside of the premises of point-of-
sale retail establishments; and
(i) Placing any stall, booth, and other displays concerning tobacco promotions to
areas outside the premises of point-of-sale locations or adult-only facilities.
SECTION 4. Standards for DSAs. All DSAs shall strictly comply with the following
standards:
(1) There shall be no opening that will allow air to escape from the DSA to the
smoke-free area of the building or conveyance, except for a single door equipped
with an automatic door closer; provided that, if the DSA is not located in an open
space, such door shall open directly towards a Non-smoking Buffer Zone (Buffer
Zone) as defined in this Order;
(2) The DSA shall not be located in or within ten (10) meters from entrances, exits,
or any place where people where people pass or congregate, or in front of air intake
ducts;
(3) The combined area of the DSA and the Buffer Zone shall not be larger than 20%
of the total floor area of the building or conveyance, provided that in no case shall
such area be less than ten (10) square meters;
(6) Minors shall not be allowed inside the DSA and the Buffer Zone;
(7) The DSA shall have the following signages highly visible and prominently
displayed:
(8.3) Prohibition on the entry of persons below eighteen (18) years old.
(c) Locations in which fire hazards are present, including gas stations and storage
areas for flammable liquids, gas, explosives or combustible materials;
(d) Within the buildings and premises of public and private hospitals, medical, dental,
and optical clinics, health centers, nursing homes, dispensaries and laboratories;
and
Nothing in this order shall compel persons-in-charge to establish DSAs nor prevent them
from instituting more stringent measures in their buildings and establishments to better
ensure a smoke-free environment in their premises.
(a) prominently post and display the "No Smoking" signage, in the locations most
visible to the public in the areas where smoking is prohibited. At the very least, the
"No Smoking" signage must be posted at the entrance to the area, which shall be at
least 8 x 11 inches in size, where the symbol shall occupy no less than 60% of the
signage, while the remaining 40% of the signage shall show the pertinent
information, as follows:
As for the DSA, after complying with the specifications in Section 4, prominently
display the following elements in the signage:
(b) prominently post and display the "No Smoking" signage in the most conspicuous
location within the public conveyance. At the very least, a three and a half (3.5)
square inch "No Smoking" signage shall be placed on a windshield and a ten (10)
square inch "No Smoking" sign at the drivers back seat.
(c) Remove the places where smoking is prohibited all ashtrays and other
receptacles for disposing of cigarette refuse;
(g) Establish internal procedure and measures through which this Order shall be
implemented and enfordes within the area of which he or she is in charge. This
includes compliance with the smoking, sales. Distribution advertising and promotions
restrictions (e.g. warning smoking violators in banned areas and requesting them to
stop smoking), and if they refuse to comply, reporting the incident to the
City/Municipal Health Office, the nearest peace officer, or to any member of the
Smoke-Free Task Force;
(h) Ensure that all the employees in the establishment are aware of this Order and
the procedure and measures for implementing and enforcing it;
(i) For all signage required to be posted under (a), (b) (d) and (f) above, provide for
versions of them in the local dialect or in English;
SECTION 6. Persons Liable. The following persons shall be liable and be punished in
accordance with the governing provisions of RA No. 9211 and other applicable laws;
(a) Any person or entry who commits any of the prohibited acts stated in Section 3
hereof;
(b) Persons-in-charge who knowingly allow, abet, authorize or tolerate the prohibited
acts enumerates in Section 3, or who otherwise fail to fulfill the duties and
obligations enumerated in Section 3 hereof.
SECTION 7. Penalties. Violations of this Order shall be punishable in accordance with the
applicable penalties provided under Section 32 of RA No. 9211 and other applicable laws.
SECTION 8. Smoking Cessation Program. Local Government Units (LGUs) particularly the
respective City/Municipal Health Officer, in coordination with the Department of Health are
enjoined to develop, promote and implement their respective Local Smoking Cessation
Programs consistent with the National Smoking Cessation Program established pursuant to
RA No. 9211, and to encourage the participation of public and private facilities which may
be able to provide for the requirements of program. Smokers who are willing to quit and/or
those found violating this Order may be referred to the Local Smoking Cessation Program
and its facilities.
SECTION 9. Smoke-Free Task Force. All cities and municipalities are enjoined to form a
local Smoke-Free Task Force to help carry out the provisions of this Order. Members of the
Philippine National Police and Smoke-Free Task Forces are directed to carry out the
provisions of this Order, including the apprehension of violators and the institution of
criminal proceedings for violations of this Order, in accordance with relevant laws, rules and
regulations, and strictly observing due process.
SECTION 10. Funding. The amount necessary to implement the provisions of this Order
shall be identified by the Department of Budget and Management. The appropriations
necessary for the continued implementation of this Order in succeeding years shall be
prepared in accordance with regular government budget procedures and shall be included
in the budget of the concerned national government agancies uner the annual General
Appropriations Act.
SECTION 11. Separability Clause. If any section or part of this Order is held
unconstitutional or invalid, the other sections or provisions not otherwise affected shall
remain in full force or effect.
SECTION 12. Repealing Clause. All orders, rules and regulations, issuances or any part
thereof inconsistent with the provisions of this Order are hereby repealed amended or
modified accordingly.
SECTION 13. Effectivity. This Order shall take effect sixty (60) days after publication in a
newspaper of general circulation.
DONE in the City of Manila this 16th day of May in the year of our Lord, Two Thousand and
Seventeen.
By the President:
Impact of smoke-free policies on exposure to second-hand smoke
Article 8 of the WHO FCTC aims to provide protection from exposure to tobacco smoke.
According to the Global Progress Report, 2012, Article 8 has been implemented in 83
countries (46.9%), the highest number of countries implementing any WHO FCTC article. By
2012, as many as 109 Parties reached their individual five-year time frame for
A comprehensive review on the impact of public smoking bans was undertaken by the
Cochrane group and published in 2009 (5). Fifty studies were reviewed, including a variety of
methodologies and sizes, with all the studies having taken place in North America, Europe or
Australasia. No meta-analysis was performed due to the heterogeneity of the studies. This
review looked at studies measuring the actual reduction in SHS exposure (5).
Reduced exposure to SHS is the first outcome measure for a smoke-free policy. In this
Cochrane review there were 31 studies reporting on exposure to SHS, mostly in workplaces.
All of the studies clearly showed reduced self-reported exposure to SHS after policy
implementation. This was either expressed as reduction in the length of time exposed (71%
Eighteen studies, using biomarkers, like salivary cotinine, to validate these self-reports found
39% to 89% reduction in exposure. The studies reviewed showed that after the public
smoking bans were in place, there was consistent evidence that smoking bans reduced
exposure to SHS in workplaces, restaurants, pubs and other public places. Hospitality
workers showed a greater reduction in exposure than the general public (5).
As an illustration, three studies are summarised in Table 1. One of the studies that took
place in Spain (6) is described in the review. Another study is from Mexico (7) and the other
study is from India (8). The studies from Spain and Mexico document a decline in exposure
to SHS in indoor workplaces and hospitality venues. The study from India shows the extent
of further efforts needed for compliance with the law, but does not have measurements from
A number of studies from various regions, particularly in North America and Europe, have
respiratory symptoms was found five months after enactment of the ban (18). In a study of
42 bars in Ireland, statistically significant improvements in lung function were found in nonsmoking
barmen one year after the ban (19). A study among bar and restaurant workers in
the city of Neuquén, Argentina (which adopted sub-national smoke-free legislation in 2007),
also showed that, consistent with the other studies, smoke-free legislation led to substantial
and immediate reduction of respiratory symptoms (from pre-ban level of 57.5% to a post-ban
level of 28.8%). There was also significant reduction in sensory irritation symptoms as well
spirometry (20).
Impact of smoke-free policies on perinatal and child health
A systematic review and meta-analysis of the effect of smoke-free legislation on child health (the first
one ever conducted), was published in the Lancet in 2014. Researchers combined the results of 11
studies from Europe and North America published between 2008 and 2013 involving more than 2.5
million births and almost 250,000 cases of asthma exacerbations in children. After the results of the
studies were pooled in a meta-analysis, it was found that hospital visits for childhood asthma and
premature births both declined about 10% in the year after smoking bans took effect in each of the
jurisdictions covered by the study (21). Researchers concluded that smoke free legislation was
associated with a 10% reduction in the relative risk of preterm birth (-10.4%, 95% Confidence Interval
[CI] -18.8 to -2.0) and with a 10% reduction in the relative risk of hospital attendances for childhood
asthma (-10.1%, 95% CI -15.2 to -5.0). According to the researchers, when considered along with the
health benefits shown in adults, this study provides strong support for the implementation of smokefree
polices in line with the WHO FCTC (21). It is important to note that despite fears that smoke-free policies
would lead to more smoking at home, studies have shown the opposite to be true. Strong smoke-free
laws change the social norms around smoking leading to reduced smoking at home, thus having a major
impact on child health outcomes (22).
Cigarette consumption is found to be negatively related to price. The estimated price elasticity
from those studies using aggregated data varies from -0.14 to -1.23, but most fall in the
narrower range from -0.3 to -0.5, including the result from the two quasi-experimental studies
(Baltagi and Goel, 1987; Peterson et al., 1992). The estimated price elasticities from the studies
using individual-level data, in general, are comparable to those estimates from the studies using
the aggregate data.
Nearly all of the studies of the price-demand relationship focus on the developed countries.
Warner (1990) argued that price responsiveness in less developed countries is likely to be
greater than in more developed countries, given the relatively low incomes and relatively lower
level of cigarette consumption by smokers in poor countries. A few studies have evaluated the
price-consumption relationship of cigarettes in developing countries. Findings from studies using
data from Papua New Guinea (Chapman and Richardson, 1990), China (Mao, 1996; Xu, Hu
and Keeler, 1998), South Africa (van der Merwe, 1998), Zimbabwe (Maranvanyika, 1998), and
Taiwan Province of China (Hsieh and Hu, 1997) support this argument.
The question of whether youth are more or less responsive to prices than are adults has been
examined in a number of studies using individual-level data (Lewit, et al., 1981; Lewit and
Coate, 1982; Grossman et al., 1983; Wasserman et al., 1991; Chaloupka and Grossman, 1996;
Farrelly, et al., 1998, and Tauras and Chaloupka, 1998). Findings from those studies are mixed.
The earlier studies on this issue (Lewit, et al., 1981; Lewit and Coate, 1982; and Grossman et
al., 1983) found that youth are more sensitive to prices than are adults. This result, however,
was challenged by the study done by Wasserman et al. (1991), which found that the price
responsiveness of youth was not significantly different from that of adults. Recent studies of
youth and young adult smoking (Chaloupka and Grossman, 1996; Farrelly et al., 1998; Tauras
and Chaloupka, 1998) generally supported the earlier results that the price sensitivity of
cigarette demand was inversely related to age. Those recent studies estimated the price
elasticity of demand for cigarettes by youth was between -1.1 and -1.3, very similar to -1.44
estimated Lewit et al. in1981.
The price responsiveness of sub-population groups by income levels has been investigated by a
number of researchers (Townsend, 1987; Chaloupka, 1991; Townsend et al., 1994; Farrelly et
al., 1998). Results from those studies indicate that cigarette demand is less price elastic for
more educated or higher income individuals. For example, Farrelly et al. estimated individuals
with family income below the sample median were 70 percent more responsive to prices than
those with higher family income.
Smoking restrictions in public places and private work sites
The impact which smoking restrictions have on cigarette demand has been evaluated in a
number of studies (Wasserman et al., 1991; Chaloupka, 1992; Chaloupka and Saffer, 1992;
Keeler et al., 1993; Chaloupka and Grossman, 1996; Evans et al., 1996; Chaloupka and
Wechsler, 1997; Chaloupka and Pacula, 1998; Bardsley and Olekalns, 1998; Yurekli and
Zhang, 2000). In general, smoking restrictions have been found to reduce both smoking
prevalence and average daily cigarette consumption among smokers. For example, Yurekli and
Zhang (2000) estimated that restrictions on smoking reduced cigarette consumption per capita
by 4.5 percent in the United States in 1995.
There are two different views about the impact of cigarette advertising on cigarette
consumption. The tobacco industry argues that tobacco is a mature industry, and thus
advertising affects only the market share of advertised brands and has no impact on aggregate
demand for cigarettes. In comparison, the public health community argues that advertising has
a positive effect on demand for cigarettes. Advertising is particularly effective in recruiting young
smokers.
The effect of cigarette advertising on cigarette consumption has been examined in three
different ways: (1) examining the impact directly, using either annual or quarterly national
aggregate expenditure over time or using cross sectional data; (2) investigating the impact of an
advertising ban on demand for cigarettes; and (3) studying the effect of counter advertising on
smoking (Saffer and Chaloupka, 1999). Studies that examined the impact of advertising on
cigarette consumption and results from those studies are summarized in Table 8.3. Studies that
used the aggregated data generally found at most a small effect of advertising on cigarette
demand. Studies using cross sectional data concluded that advertising had a significant positive
effect on consumption, which increased both the market share of the advertised brand and the
market size of cigarettes in general. Studies on the effect of advertising bans yielded an
inconclusive result and those on counter advertising found that counter advertising reduced
cigarette consumption. Saffer and Chaloupka (1999) evaluated the impact of advertising bans
using data between 1970 and 1992 for 22 OECD countries and concluded that a
comprehensive set of tobacco advertising bans can reduce cigarette consumption and a limited
set of tobacco advertising will have little or no effect. They estimated that cigarette consumption
would fall by 6.3 percent if all 22 OECD countries had comprehensive bans.
Impact of cigarette taxes on demand for cigarettes
A number of studies have examined the effect of cigarette taxes on retail prices (Sumner, 1981;
Sumner and Wohlgenant, 1985; Sung et al., 1994; Barnett et al., 1995; and Keeler et al, 1996).
When those studies conclude that increases in cigarette and other tobacco taxes would
certainly result in a higher price for these products, differences exist in the estimated magnitude
of the increase in retail prices for a give level of tax increases. Early studies (Sumner, 1981;
Sumner and Wohlgenant, 1985) concluded that pricing behaviour of the cigarette industry was
similar to that of firms in a competitive industry in spite of its oligopolistic structure, thus cigarette
taxes were fully passed to the price of cigarettes at the retail level. Recent studies (Sung et al.,
1994; Barnett et al., 1995; and Keeler et al, 1996), which accounted for the dynamic nature of
an oligopolistic industry, or modelling the demand and supply for cigarettes simultaneously,
however, found that cigarette prices were increased by more than amount of the tax increase.
For example, Keeler et al. (1996) estimated that a one-cent increase in a state’s cigarette tax
would raise retail prices in that state by 1.1 cents.
The levels of taxes vary across nations or states or provinces in a country. Increasing the level
of taxes in a higher-tax nation or a higher-tax state in a country would lead to a larger price
differential across countries or states and a higher incentive for cross-border shopping and
cigarette smuggling. Thus, the impact which increasing cigarette taxes might have on
consumption in an individual country or state depend partly on the changes in cross-border
shopping and cigarette smuggling which result from the tax increase (see below section 8.7.3).
Results from studies on demand for cigarettes have shown that the price elasticity of demand
for cigarettes is less than one (see section 8.5above on demand for cigarettes). Thus, cigarette
tax increases would lead to an increase in total tax revenues. The issue, however, is
complicated by an unintended effect, cigarette smuggling, which results from a cigarette tax
increase. The increase in smuggling which might be stimulated by an increase in taxes can
significantly dampen the increase in revenue which would otherwise be expected. The tobacco
industry argues that increases in cigarette smuggling and other tax evasions from cigarette tax
increases would actually lead to a reduction in tax revenues (British American Tobacco, 1994).
Studies on the impact of cigarette tax increases in the United States concluded that the tax
evasion which is due to price differentials across states could be large in absolute dollar
amounts but small as a share of the total tax revenue (ACIR, 1985 and Yurekli and Zhang,
2000). For example, Yurekli and Zhang (2000) estimated that the loss in tax revenues from tax
evasion from cigarettes accounted for less than 6 percent of the total cigarette tax revenue
between 1985 and 1995. There is no empirical evidence that a cigarette tax increase in a state
has resulted in a decrease in the state’s total cigarette tax revenue in the United States.
However, losses in tax revenues from a tax increase based on the Canadian experience were
much bigger. Galbraith and Kaiserman (1997) estimated that each 1 percent increase in
cigarette taxes in Canada would lead to a fall of 1 percent in taxed sales. Concern about loss in
cigarette tax revenues contributed to the decision of cigarette-tax rollback in 1994 in Canada.
One study in the United Kingdom estimated that the revenue elasticity for cigarette taxes during
1971 and 1993 was between 0.6 and 0.9 (Townsend, 1996).
Cigarette tax increases and cigarette smuggling
Differences in cigarette prices among countries and among different taxing jurisdictions as a
result of differences in cigarette taxes create an incentive for both casual and organized
cigarette smuggling and other forms of tax evasion. This smuggling problem is exacerbated by a
number of factors, including the relatively easy transportation of tobacco products, the high
potential profits from this illegal activity, the presence of an informal distribution network in many
countries, the availability of tax free and duty-free cigarettes, and nonexistent or relatively weak
policies concerning cigarette smuggling and lack of enforcement (ACIR, 1985; Joosens and
Raw, 1995, 1998; Joosens and van der Merwe, 1997).
There have been relatively few econometric analyses of the impact of price differences on
organized and casual cigarette smuggling. Nearly all of these studies published are based on
annual state-level cigarette sale data from the United States (ACIR, 1985; Baltagi and Levin,
1986; Chaloupka and Saffer, 1992; Becker et al., 1994; Yurekli and Zhang, 2000). Those
studies have concluded that the casual and organized smuggling of cigarettes could account for
a significant share of sales in those states, but at an aggregate level, smuggling accounted for
less than 5 percent of cigarette consumption. A recent study estimated that the magnitude of
worldwide cigarette smuggling accounts for 6 to 8 percent of global cigarette consumption
(Merriman, Yurekli, and Chaloupka, 2001).