The CDC reports, based on excise tax data, that per capita cigarette consumption in the U.S. fell by more than two-fifths from 2000 to 2011, while per capita consumption of "noncigarette combustible products" doubled. The shift, especially pronounced since Congress raised federal taxes on cigarettes, small cigars, and rolling tobacco in 2009, suggests that some smokers are switching from cigarettes to less expensive alternatives (though per capita consumption of all combustible tobacco products nevertheless dropped by 36 percent during this period). The CDC notes that sales of pipe tobacco rose by 573 percent between 2008 and 2011, while sales of "roll-your-own" tobacco, which is taxed at a higher rate, fell by 76 percent. "Because loose tobacco products are classified based on how they are labeled," the CDC says, "the loose tobacco tax disparity of $21.95 per pound led manufacturers to relabel roll-your-own tobacco as pipe tobacco and then market this relabeled pipe tobacco for roll-your-own use." (Yes, Americans are still permitted to roll their own cigarettes, although they probably won't be doing it in machine-equipped shops dedicated to that purpose anymore, thanks to a provision in the recently enacted highway bill that taxes smokes made in such stores at the same rate as ready-made cigarettes.)
Another way the market adapted to the tax hikes: Makers of "small cigars," subject to a relatively high tax because they are deemed close cigarette substitutes, found they could bulk them up slightly and thereby qualify for the "large cigar" category, which is taxed based on price rather than per unit. The result: "a new 'large cigar' [that] can appear almost identical to a 'small cigar,' which resembles a typical cigarette and can cost as little as 7 cents." From 2008 to 2011, small cigar consumption fell by 86 percent, while large cigar consumption rose by 126 percent.
Another advantage of cigars is that they are not subject to the federal ban on added flavors, which is supposedly aimed at making cigarettes less appealing to teenagers but targets products that have never been popular among teenagers. Prior to the ban on flavored cigarettes, which was part of the 2009 law that gave the Food and Drug Administration authority over tobacco, they accounted for less than 0.1 percent of the underage market. The one exception was menthol brands such as those sold by Philip Morris, which were exempt from the Philip-Morris-backed flavor ban and remain popular among teenagers. You may have noticed that since this law was enacted, paper-wrapped clove cigarettes have morphed into tobacco-wrapped clove cigars, which serve much the same function.
Cigarette smokers who switch to cigars or pipe tobacco will, as the CDC suggests, face essentially the same health risks if they do not cut back and continue to inhale (disease risks for cigar and pipe smokers are lower mainly because they tend to smoke less frequently and generally do not inhale). But from a consumer's perspective, these money-saving and product-preserving adaptations are a positive development. Which means they can only be viewed with alarm by the government, since they impede its plan to discourage consumption and limit choice (not to mention collect revenue). The CDC complains that "diminishing the public health impact of excise tax increases and regulation can hamper efforts to prevent youth smoking initiation, reduce consumption, and prompt quitting." It notes that the Government Accountability Office "recommends modifying federal tobacco taxes to eliminate large tax differentials between roll-your-own and pipe tobacco and small and large cigars." Repealing the recent tax hikes would do the trick, but that is probably not what the CDC has in mind.
The conflict between consumers' interests and the government's is illustrated by the New York Times story about the CDC report. The headline, "Big Cigars Offer Way for Smokers to Save," sounds like good news, but that impression is corrected by the article, which portrays the ability to escape any part of the federal sin tax burden as a loophole that clearly needs to be closed. Why? For the children, of course:
The lower prices of these alternative products are particularly appealing to young people, for whom cost is a significant deterrent to smoking, said Michael Tynan, a public health analyst with the C.D.C. and one of the authors of the report. A recent youth risk behavior survey found that 37 percent of male high school seniors use some form of tobacco.
The labeling changes also enable the products to be laced with fruit and other flavorings that are banned for use in cigarettes and appeal to young smokers, he said.
You may wonder why the Times focuses on male high school seniors. Possibly because they have a higher rate of "current" tobacco use (which means any consumption of any tobacco product in the last month) than any other subgroup. The numbers for all high school students (23 percent) and female seniors (25 percent), for instance, are less impressive. The Times also fails to note that tobacco consumption continues decline among teenagers (and among adults, according to the CDC's excise-tax data) despite those supposedly enticing cigars. And not surprisingly, the Times did not ask Michael Tynan on what basis he concludes that "fruit and other flavorings…appeal to young smokers" when survey data show no such thing.