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Estimating Tax Avoidance · 2006-08-21

This is a follow up to german tank analysis. In germany, probably just as well as anywhere else in the western world, the taxes for cigarettes go up and up. As expected this lead to decreasing sales of cigarettes and politicians were pretty proud that they did so very much for public health.

Now the cigarette industry argued that the decrease is rather a symptom of substitution then of avoidance. But how to figure out? Well it is pretty simple and follows the same scheme as german tank analysis. One just draws a random sample of cigarette packs from some arbitrary dump yards and checks for their origin. By doing this one shall get a pretty good idea about how many cigarettes, black market and legal, are actually smoked. One might even figure out what the main smuggling routes are.


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