HLTH 8054 Week 11 Tobacco Price Floor Proposal Example

A Floor Under the Price of Tobacco: A Defended Proposal for a Minimum Price Law and a Ban on Price Discounts in a Fictional Mid-Sized City, Answering the Objections on Fairness, Substitution and Choice

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Walden University

HLTH 8054: Lifestyle and Chronic Diseases

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Month Day, Year

A Floor Under the Price of Tobacco: A Defended Proposal for a Minimum Price Law and a Ban on Price Discounts in a Fictional Mid-Sized City, Answering the Objections on Fairness, Substitution and Choice

Introduction

No other single exposure causes as much preventable illness among the chronic diseases this course has studied, lung cancer, chronic obstructive pulmonary disease and heart disease, as tobacco does. Most cities cannot set tobacco excise taxes, which are usually reserved to states and national governments. Many can regulate how tobacco is sold. This paper proposes that Millbrook, a fictional city of about 250,000 people, adopt two linked measures: a minimum retail price for cigarettes, cigars and other combustible tobacco products, and a ban on price discounts, including coupon redemption, multipack offers and buy-one-get-one promotions. The proposal acts on price because price is where the evidence on tobacco use is strongest. Most of the paper is spent answering the three objections such measures face.

The Problem in Millbrook

In Millbrook, as in many cities, adult smoking has fallen over the past two decades but remains concentrated among residents with lower incomes and less formal education. Tobacco retailers are dense in the city's poorer neighborhoods, and their windows advertise discounted packs and multipack deals. The city cannot raise the state excise tax, and the retail promotions offset part of the price increases the state has already made. A smoker who uses a coupon or buys a carton on promotion pays less than the shelf price the tax was meant to produce.

Why Price

Price is the most studied lever in tobacco control. A review of more than 100 studies, including a growing number from low- and middle-income countries, concluded that significant tax increases that raise prices encourage current users to quit, prevent uptake and reduce consumption among those who continue, with the greatest impact on young people and the poor (Chaloupka et al., 2012). Price works through the same channel whether it rises because of a tax or because a city forbids sales below a floor. That is the logic of the proposal: it protects the price signal the state's tax was meant to send.

Price promotions blunt that signal. A national survey of U.S. adult smokers found that about 55.4% had used at least one of five price-minimization strategies in the previous year, such as coupons, multipack purchases or buying cheaper brands, with an average saving of $1.27 per pack, about 22% (Xu et al., 2013). The authors concluded that policies reducing these opportunities would increase the public health gains from excise taxes.

The Proposal

Millbrook would set a minimum retail price per pack of 20 cigarettes, and equivalent minimums for other combustible tobacco, at a level above the current average shelf price including state tax. The floor would rise each year with inflation. Retailers would be forbidden to redeem coupons, sell multipacks at a lower unit price or offer any discount below the floor. Enforcement would run through the city's existing tobacco retail license, with inspections and fines that escalate to suspension of the license. Revenue from license fees and fines would fund cessation services through the city health department, including free nicotine replacement for residents with low incomes.

The Evidence on Non-Tax Price Policies

Evidence on non-tax price policies is thinner than evidence on taxes, and the proposal says so. A systematic review of literature on these policies identified 56 studies or reports and found that price promotion restrictions and minimum price laws were the most common approaches described, but that few studies had measured their effect on average prices, price variation or disparities in tobacco use (Golden et al., 2016). The proposal therefore rests on two steps of reasoning rather than on direct trials: that higher prices reduce tobacco use, which is well established, and that floors and discount bans raise the prices smokers actually pay, which follows from how the measures work and from the evidence on how often smokers use discounts.

Objection 1: The Measure Burdens Low-Income Households

The strongest objection is fairness. Smokers with low incomes spend a larger share of their income on tobacco, so a higher price takes more from them. The objection is serious, and the proposal answers it in two ways. First, the evidence on who benefits: a review of 77 primary studies and seven reviews found strong evidence that tobacco price increases have a pro-equity effect on socioeconomic disparities in smoking, because people with lower incomes are more likely to quit or cut down in response to price (Hill et al., 2014). Over time, the measure is expected to narrow the gap in smoking, and therefore in tobacco-related disease, between richer and poorer residents. Second, the proposal returns money to the people most affected by funding free cessation support for residents with low incomes. A smoker who wants to quit when prices rise should not be left to pay for patches and counseling alone.

Objection 2: Smokers Will Substitute

The second objection is substitution. Smokers might buy in neighboring towns, switch to products outside the law or turn to illicit sales. The proposal limits product substitution by covering all combustible tobacco rather than cigarettes alone. Cross-border buying is a real limit for a single city, and the paper does not claim to prevent it entirely; it argues that most purchases are made close to home, especially by people without cars, and that the city's experience can support a regional or state measure later. Illicit sales are a concern for any price policy. The review of tax policy judged that opponents' claims of harmful economic effects from higher tobacco prices are false or overstated, and it drew on global experience with tax administration to describe how leakage can be contained (Chaloupka et al., 2012). The proposal's license-based enforcement gives Millbrook's inspectors a direct tool for the same purpose.

Objection 3: The Measure Singles Out a Product People Enjoy

The third objection is that the city is interfering with adult choice. The proposal does not ban tobacco or restrict who may buy it. Adults remain free to smoke. What changes is the price, and specifically the industry's ability to lower it through promotions. Price discounts are a marketing tool, not a natural feature of the product, and they are used to keep people smoking and to attract new users. Restricting them is a limit on a commercial practice. Tobacco is also unlike most products people enjoy: it kills a large share of its long-term users when used as intended.

Limits

The proposal has limits. The direct evidence for minimum price laws and discount bans is limited, so the city should evaluate the measures, tracking average retail prices, the use of discounts, cigarette sales and adult smoking rates. Cross-border purchasing may reduce the effect for a single city. The measure does not cover e-cigarettes, which raise separate questions about harm and cessation that this paper does not settle.

Conclusion

Millbrook cannot set the tax, but it can stop retail promotions from undoing it. A minimum price with a ban on discounts acts at the point where the evidence suggests tobacco use responds. The objections deserve answers, and the strongest, fairness, is met by evidence that price increases narrow smoking disparities and by a design that returns revenue to cessation support for those with the least money.

References

Chaloupka, F. J., Yurekli, A., & Fong, G. T. (2012). Tobacco taxes as a tobacco control strategy. Tobacco Control, 21(2), 172-180. https://doi.org/10.1136/tobaccocontrol-2011-050417

Golden, S. D., Smith, M. H., Feighery, E. C., Roeseler, A., Rogers, T., & Ribisl, K. M. (2016). Beyond excise taxes: A systematic review of literature on non-tax policy approaches to raising tobacco product prices. Tobacco Control, 25(4), 377-385. https://doi.org/10.1136/tobaccocontrol-2015-052294

Hill, S., Amos, A., Clifford, D., & Platt, S. (2014). Impact of tobacco control interventions on socioeconomic inequalities in smoking: Review of the evidence. Tobacco Control, 23(e2), e89-e97. https://doi.org/10.1136/tobaccocontrol-2013-051110

Xu, X., Pesko, M. F., Tynan, M. A., Gerzoff, R. B., Malarcher, A. M., & Pechacek, T. F. (2013). Cigarette price-minimization strategies by U.S. smokers. American Journal of Preventive Medicine, 44(5), 472-476. https://doi.org/10.1016/j.amepre.2013.01.019