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

Prev Med. 2005 Jul;41(1):276-83. doi: 10.1016/j.ypmed.2004.10.024. Epub 2005 Jan 7.


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 dollars 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 dollars less on cigarettes. Total smoking-related medical costs would drop by 188 billion dollars. 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.

Publication types

  • Comparative Study
  • Research Support, N.I.H., Extramural
  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • California
  • Female
  • Health Care Costs*
  • Health Promotion / methods
  • Health Status
  • Humans
  • Male
  • Models, Economic
  • Policy Making
  • Predictive Value of Tests
  • Quality-Adjusted Life Years
  • Sensitivity and Specificity
  • Smoking / economics*
  • Smoking Cessation / economics
  • Smoking Prevention
  • Taxes / legislation & jurisprudence*
  • Tobacco Industry / economics*
  • Tobacco Industry / legislation & jurisprudence