An Exploratory Panel Data Analysis of Impacts of Cigarette Excise Taxes

and Statewide Bans on Cigarette Consumption

Richard J. Cebula
2013
Abstract: This study seeks to provide recent, i.e., updated, and new
evidence on the impact of public policy on cigarette consumption using
panel data. In particular, this exploratory study uses a state-level
panel data-set to investigate the impact on per capita cigarette
consumption in the U.S. of public policies not only in the form of
cigarette excise taxes but also in the form of heretofore largely
ignored public statutes that impose statewide bans on cigarette smoking
in restaurants and bars. Naturally, the impacts of certain economic and
non-economic (demographic) factors on cigarette are considered as well.
The five-year panel spans the period from 2002 through 2006. The
estimates in this study find that the higher the total per pack
cigarette excise tax, the lower the aggregate volume of cigarettes
consumed per capita, whereas statewide bans on cigarette smoking in
restaurants and bars are found to reduce per capita cigarette smoking as
well.

Are Cigarette Excise Taxes Effective in Reducing the Habit? The Impact
of Income versus Price on the Percentage of Adults Who Smoke
Michael Palinkas 2011
ABSTRACT Existing research has shown that increasing cigarette taxes,
and thus increasing the price of cigarettes per pack, has had a
decreasing effect on the percent of adults who smoke, but only to a
certain degree. Increasing the total price per pack of cigarettes and
utilizing the tax revenue to fund anti-tobacco programs has been the
mission of policymakers in all 50 states and the District of Columbia
since 1988. These methods may no longer be efficient, as evidenced by
the fact that many individuals still choose to smoke. This study sought
to find any additional factors that may affect the percentage of adults
who smoke. The study looked at the effects of four variables on the
percent of the adults who smoke: cigarette tax per pack, cigarette price
per pack, median income, and the number of smokingrelated deaths in
2005. The unit of analysis is the state, which also includes the
District of Columbia for the purpose of this study. The data for this
study were drawn from data produced by the U.S. Census Bureau and the
Centers for Disease Control & Prevention for the year 2005. Findings
indicated that neither the tax per pack of cigarettes nor the price per
pack has a statistically significant association with the percentage of
adults who smoke. The number of deaths attributed per year to smoking
also failed to affect the percentage of adults who smoke. In our
statistical tests, median income was the only variable to have a
significant association with the percentage of adults who smoke. Using a
multivariate regression model, a $10,000 increase in median income is

associated with an average decrease of 2 percent in the percentage of

adults who smoke, while all other variables remain constant.1 Since
total price per pack of cigarettes has been shown to have no
statistically significant effect on the percentage of adults who smoke,
additional research is necessary in order to better understand the ways
that smokers have altered their behavior due to higher prices. Further
research is also necessary in order to comprehend the income disparity
that exists between low- and high-income smokers, especially in regards
to their ability to receive and their exposure to anti-tobacco programs
and cessation advice from health care providers.
Cigarette Price Minimization Strategies in the United States: Price
Reductions and Responsiveness to Excise Taxes Michael F. Pesko PhD1,
Andrea S. Licht MS2,3, Judy M. Kruger PhD4
nov.1 2013
Abstract Introduction: Because cigarette price minimization strategies
can provide substantial price reductions for individuals continuing
their usual smoking behaviors following federal and state cigarette
excise tax increases, we examined independent price reductions
compensating for overlapping strategies. The possible availability of
larger independent price reduction opportunities in states with higher
cigarette excise taxes is explored
Authors:
Ahmad, Sajjad1
Source:
Preventive Medicine. Jul2005, Vol. 41 Issue 1, p276-283. 8p.
Abstract: 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 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.
Authors:

Doran, Christopher M.1 c.doran@unsw.edu.au

Byrnes, Joshua M1
Higashi, Hideki2
Truong, Khoa3
Source:
Addictive Behaviors. Dec2010, Vol. 35 Issue 12, p1089-1093. 5p
Abstract: This study explores the impact on government taxation revenue from increasing
excise on cigarettes in Vietnam. A dynamic population model is used to estimate future
patterns (both prevalence and consumption) of tobacco use in Vietnam, with and without
changes to tobacco excise for the period 20062016. Three increases in the base case
excise tax rate of 55% are modelled: 65%, 75% and 90%. Various price elasticities are
used to examine variations in cigarette consumption while cross price elasticities are used
to explore shifts from cigarette to other forms of tobacco. Revenue implications for the
period 20062016 are reported as discounted net present values (NPV) in 2006 values.
The model predicts that smoking rates in 2016, for both males and females, are
marginally lower than base case estimates for all taxation excise options with higher price
elasticities generating greater reductions in prevalence. In all cases, compared to base
case estimates, the results indicate a fall in number of smokers, a reduction in amount of
tobacco consumed and an increase in overall taxation revenue. The additional gain in
government revenue, expressed in NPV terms, ranges from a low of VND 69,579billion
(or USD $4.35billion) to a high of VND 108,492billion (or USD $6.79billion). Increases
in tobacco excise provide an opportunity for the Vietnamese government to increase
revenue at the same time as reducing tobacco consumption. Further research into the
wider social and economic consequences of increasing tobacco excise in Vietnam is
warranted.
Authors:
Krauss, Melissa J.1
Cavazos-Rehg, Patricia A.1
Plunk, Andrew D.1
Bierut, Laura J.1
Grucza, Richard A.1
Source:
Alcoholism: Clinical & Experimental Research. Oct2014, Vol. 38 Issue 10, p26302638. 9p.
Background Increasing state cigarette excise taxes and strengthening smoke-free air
(SFA) laws are known to reduce smoking prevalence. Some studies suggest that such
policies may also reduce alcohol use, but results for cigarette taxes have been mixed, and
associations with smoke-free air policies have been limited to some demographic
subgroups. To shed further light on the potential secondary effects of tobacco control
policy, we examined whether increases in cigarette taxes and strengthening of SFA laws

were associated with reductions of per capita alcohol consumption and whether any
reductions were specific to certain beverage types. Methods State per capita alcohol
consumption from 1980 to 2009 was modeled as a function of state price per pack of
cigarettes and SFA policy scores while controlling for secular trends and salient state
covariates. Both policy measures also accounted for local policies. Total alcohol, beer,
wine, and spirits consumption per capita were modeled separately. For each type of
beverage, we used a nested models approach to determine whether the 2 policies together
were associated with reduced consumption. Results For total alcohol consumption, and
for beer or spirits (but not wine), one or both tobacco policies were associated with
reductions in consumption. A 1% increase in cigarette price per pack was associated with
a 0.083% decrease in per capita total alcohol consumption (95% confidence interval [ CI]
0.0002 to 0.166, p = 0.0495), and a 1-point increase in SFA policy score, measured on a
6-point scale, was associated with a 1.1% decrease in per capita total alcohol
consumption (95% CI 0.4 to 1.7, p = 0.001; p < 0.001 for the hypothesis that the 2
policies are jointly associated with reduced alcohol consumption). Conclusions The
public health benefits of increasing cigarette taxes and smoke-free policies may go
beyond the reduction of smoking and extend to alcohol consumption, specifically beer
and spirits.