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Public Health. 2008 Jan;122(1):3-10. Epub 2007 Jul 3.

Raising taxes to reduce smoking prevalence in the US: a simulation of the anticipated health and economic impacts.

Author information

1
Department of Civil and Environmental Engineering, University of Nevada, 4505 Maryland Parkway, Las Vegas, NV 89154-4015, USA. sajjad.ahmad@unlv.edu

Abstract

OBJECTIVE:

To estimate health and economic outcomes of raising the excise taxes on cigarettes.

METHODS:

We use a dynamic computer simulation model to estimate health and economic impacts of raising taxes on cigarettes (up to 100% price increase) for the entire population of the USA over 20 years. We also perform sensitivity analysis on price elasticity.

RESULTS:

A 40% tax-induced cigarette price increase would reduce smoking prevalence from 21% in 2004 to 15.2% in 2025 with large gains in cumulative life years (7 million) and quality adjusted life years (13 million) over 20 years. Total tax revenue will increase by $365 billion in that span, and total smoking-related medical costs would drop by $317 billion, resulting in total savings of $682 billion. These benefits increase greatly with larger tax increases, and tax revenues continue to rise even as smoking prevalence falls.

CONCLUSIONS:

Increasing taxes on cigarettes is a unique policy intervention that reduces smoking prevalence, generates additional tax revenue, and results in significant savings in medical care costs.

PMID:
17610918
PMCID:
PMC2246022
DOI:
10.1016/j.puhe.2007.02.020
[Indexed for MEDLINE]
Free PMC Article

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