Title

Increasing excise taxes on cigarettes in California: a dynamic simulation of health and economic impacts

Document Type

Article

Abstract

Background

California raised cigarette excise taxes in 1999, and may generate additional health and economic benefits by raising them further.

Methods

A dynamic computer simulation model follows births, deaths, migration, aging, and changes in smoking status for the entire population of California over 75 years to estimate the cumulative health and economic outcomes of these changes under several excise tax rate conditions (up to 100% price increase).

Results

A 20% tax-induced cigarette price increase would reduce smoking prevalence from 17% to 11.6% with large gains in cumulative life years (14 million) and QALY's (16 million) over 75 years. Total spending on cigarettes by consumers would increase by $270 million in that span (all going to tax revenue), and those who reduce the number of years spent as a smoker would spend $12.5 billion less on cigarettes. Total smoking-related medical costs would drop by $188 billion. These benefits increase greatly with larger tax increases, with which tax revenues continue to rise even as smoking prevalence falls.

Conclusions

Even considering benefits from the 1999 increase, California has not yet maximized the potential of excise taxes to lessen the negative impacts of smoking. Additional tax increases would provide added health benefits and revenue to the state.

Disciplines

Civil and Environmental Engineering | Computational Engineering | Law | Medicine and Health | Public Health | Taxation-State and Local | Tax Law

Permissions

Use Find in Your Library, contact the author, or use interlibrary loan to garner a copy of the article. Publisher copyright policy allows author to archive post-print (author’s final manuscript). When post-print is available or publisher policy changes, the article will be deposited

Publisher Citation

Sajjad Ahmad, Increasing excise taxes on cigarettes in California: a dynamic simulation of health and economic impacts, Preventive Medicine, Volume 41, Issue 1, July 2005, Pages 276-283, ISSN 0091-7435, 10.1016/j.ypmed.2004.10.024. (http://www.sciencedirect.com/science/article/pii/S0091743504005808)