Summary: Increasing excise taxes on cigarettes in California: a dynamic simulation
of health and economic impacts
Sajjad Ahmad, Dr.*
Department of Planning, Policy and Design, University of California, HPRG 202 SE 1, Irvine, CA 92697-7075, USA
Available online 7 January 2005
Background. California raised cigarette excise taxes in 1999, and may generate additional health and economic benefits by raising them
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.
D 2004 Elsevier Inc. All rights reserved.
Keywords: Tobacco policy; Price elasticity; Economic impacts; Health impacts; Cigarette excise taxes in California