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Since federal tax rates increased in 2009, manufacturers have relabelled cigarette tobacco as pipe tobacco to evade taxes.1 Based on methods previously reported,2 I estimate over US$3.5 billion in federal tobacco tax revenue was lost to this tax evasion by the end of 2014, and states lost hundreds of millions more. The tax change was coincident with a technological innovation: a high-speed machine that could combine a bag of loose tobacco and a box of empty cigarette tubes to produce a carton of cigarettes in about 8 min.1 As these machines quickly spread around the country, smokers discovered they could cut their costs substantially—in some cases buying cartons for a half or a third of the price they were …
Competing interests None declared.
Provenance and peer review Not commissioned; externally peer reviewed.
Data sharing statement This research letter includes all the data I received on taxed cigarette tubes sold in the US. No additional data are available.
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