Estimate of cross-border cigarette purchases in France 2004-2007

In France, several studies have already employed different methods to estimate the extent of tax evasion on tobacco products.

The OFDT was able to estimate cross-border tobacco purchases at between 14 and 20% of the French market for 2004 to 2006. For 2004, the INSEE (French National Institute of Statistics and Economic Studies) evaluated such tobacco purchases at 6% of the French market compared to the 2002 market situation. These significantly different estimates can be explained by the empirical methods used and the hypotheses proposed. The variations demonstrate the need for a more elaborate assessment framework.

With a view to improving the robustness of the estimates, this issue of Tendances develops a more complex methodological method.

This approach, which is based on a theoretical system that describes individual reasons for crossing borders, takes into consideration not only tobacco price differences between France and its border countries, but also the distance that separates individuals from the closest borders.

The question that an individual wishing to purchase cross-border tobacco asks himself or herself is therefore the following: is the price difference advantageous enough to offset the transport costs incurred when crossing the border?

The econometric analysis used here offers a way to quantify the influence of each determinant of cross-border tobacco purchases, all other things being equal. The analysis also finetunes the overall tax evasion estimates.