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

Public Health. 2008 Jan;122(1):3-10. doi: 10.1016/j.puhe.2007.02.020. Epub 2007 Jul 3.


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.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Computer Simulation*
  • Health Expenditures*
  • Health Services / statistics & numerical data
  • Humans
  • Models, Econometric
  • Prevalence
  • Quality of Life
  • Smoking / economics*
  • Smoking / legislation & jurisprudence
  • Taxes / economics*
  • Taxes / legislation & jurisprudence
  • United States