A major state tobacco tax increase, the master settlement agreement, and cigarette consumption

The California experience

Hai Yen Sung, Teh Wei Hu, Michael Ong, Theodore E. Keeler, Mei Ling Sheu

Research output: Contribution to journalArticle

38 Citations (Scopus)

Abstract

Objectives. We evaluated the combined effects on California cigarette consumption of an additional 500 per pack state tax imposed by Proposition 10 of January 1999 and a 450 per pack increase in cigarette prices stemming from the Master Settlement Agreement (MSA) of November 1998. Methods. We used quarterly cigarette sales data for the period 1984-2002 to estimate a time-series intervention model adjusting for seasonal variations and time trend. Results. Over the period 1999 through 2002, the combined effect was to reduce cigarette consumption by 2.4 packs per capita per quarter (1.3 billion packs total over the 4-year period) and to raise state tax revenues by $2.1 billion. These effects were similar to the effects of a 25 per pack tax increase enacted by Proposition 99 a decade earlier, although with decreased relative effectiveness as measured by percentage of reduction in cigarette consumption divided by percentage of increase in taxation (-0.44 vs -0.60). Conclusions. A major increase in price through taxation and the MSA provided a strong economic disincentive for smokers in a state with a low smoking prevalence. This effect could be reinforced if part of the MSA payments were devoted to tobacco control programs.

Original languageEnglish
Pages (from-to)1030-1035
Number of pages6
JournalAmerican Journal of Public Health
Volume95
Issue number6
DOIs
Publication statusPublished - Jun 2005

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Taxes
Tobacco Products
Tobacco
Motivation
Smoking
Economics

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health

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A major state tobacco tax increase, the master settlement agreement, and cigarette consumption : The California experience. / Sung, Hai Yen; Hu, Teh Wei; Ong, Michael; Keeler, Theodore E.; Sheu, Mei Ling.

In: American Journal of Public Health, Vol. 95, No. 6, 06.2005, p. 1030-1035.

Research output: Contribution to journalArticle

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