Health and Economic Impact of Tobacco Taxation


Many people consider that taxation is a great way to deter people from buying things which are otherwise harmful to them. For example: a tax on tobacco products would make them cost more money which would deter people from buying as many tobacco products or buying them as often. People also believe that taxing tobacco products would aid the economy by bringing more tax revenue into the system which can then be used in other social systems.

Taxing tobacco has been one of the most effective strategies in the reduction of smoking among low-income people and teenagers. The high health cost associated with tobacco use means that a reduction in the rate of smoking can lead to significant health gains. Younger people with lower income with benefit more from improved health which would also partially offset the potential regression that could occur with tobacco taxes.

An average smoker during their lifetime will die almost seven years earlier than someone who doesn’t smoke. This is true even in people with similar characteristics like income, sex, and level of education. Research shows that taxes on tobacco will extend lives and reduce smoking. Examining over 100 international studies shows the following: Higher taxes are a very effective control strategy which work to improve public health as a whole.

As a habit, smoking tends to start sometime early in live. 4 out of 6 smokers began prior to the age of 18. Compare that with the 1/100 that begin after age 26. The main reason that taxes are so efficient is because younger people are more sensitive to increases in price than older people. The CBO tries to summarize some of the existing research and comes to the conclusion that even a ten percent increase in the price of cigarettes will deter those people from partaking in the substance.

Another estimate from the CBO is that there could be two point six million adults fewer who smoke over the age of 18 by 2021 due to an increase in just $1 a pack. This is six percent less than the current law allows. This would be a major public health police accomplishment and would allow millions of people to live healthier, more productive, and longer lives.

Overall the taxation of tobacco would reduce tobacco consumption. This would have great health effects on the general public. It would reduce the number of smokers and the number of smoking related diseases. In addition it would bring more money into the economy.