Policy Factsheet

Tobacco Excise Taxes

Reasons for Policy

  • Excise taxes on tobacco products make the use of tobacco less attractive to adolescents and young adults who have limited resources and a variety of options for spending available money.1
  • Tax increases for cigarettes are increasingly acceptable.2
  • An effect of higher price on cigarettes may reduce the number of smokers.2
  • Taxes on cigarettes may be justified because smokers impose costs on others which may exceed tax levels.2

Community Groups

  • Local Government
  • State Government

Policy Components

  • Imposing an excise tax on tobacco products
  • Increasing an already existing excise tax on tobacco products

Desired Outcomes

  • Decrease in tobacco use among adolescents and young adults
  • Reduction in the number of smokers

Level of Evidence Available to Evaluate Effectiveness of Policy

For all policies we describe on this website, we have applied the Standards of Evidence as defined by Flay et al. (2005) in the Standards of Evidence document published by Prevention Science.

The effectiveness level of this policy is 1: Evidence-Based Policies Meeting Criteria for Effectiveness.

The levels of effectiveness as noted are:

  1. meets criteria for policy effectiveness (consistent, positive outcomes from at least two high-quality experimental or quasi-experimental trials using a comparison group or interrupted time series design);
  2. consistent evidence available linking policy with positive outcomes from high-quality observational studies only;
  3. insufficient evidence available for policy or policy components.

Achievable Results

On average, an increase in the price of tobacco products can achieve:

  • A decrease in both overall prevalence of tobacco product use and consumption of tobacco products.1
  • Reductions in tobacco use in both adolescents and young adults.1

On average, a 10% increase in tobacco product price can achieve:

  • 2.3% decrease in the quantity of product consumed by adolescent users.1
  • 3.7% decrease in tobacco use participation among young adults.1

Note: Effect sizes were measured by changes in price elasticity of demand estimates (i.e. a negative price elasticity of demand estimate reflects a decrease in tobacco use in response to an increase in tobacco product price).

Community Examples

Anchorage, Alaska, imposes an excise tax on cigarettes and other tobacco products.

Cook County, Illinois, imposes a cigarette tax. In addition, there is an Illinois state tax on cigarettes.

Note: High tobacco excise taxes may encourage avoidance:

Links to Policy Examples

Anchorage Municipal Code, Chapter 12.40 Excise Tax on Cigarettes and Tobacco (specifically §§ 12.40.05, .010, .020)

Cook County Tobacco Tax Ordinance (Ord No. 09-O-15); Cook County, Illinois, Code of Ordinances, Chapter 74, Article XI – Tobacco Tax (§§ 74.430-.448)

Illinois Statutes, § 35 ILCS 130 Cigarette Tax Act

Be sure to check with your state, county, and municipal governments regarding potential existing laws that may impede any new policy development.

Local governments and organizations may check existing state and federal statutes and administrative codes for the authority to implement local policies.

References

1 Hopkins DP, et al. (2001). Reviews of Evidence Regarding Interventions to Reduce Tobacco Use and Exposure to Environmental Tobacco Smoke American Journal of Preventive Medicine, 20(2S), 16-66.

2 Grossman, M, Sindelar, JL, Mullahy, J, Anderson, R (1993). Alcohol and Cigarette Taxes. Journal of Economic Perspectives, 7(4), 211-222

3 Flay, BR, Biglan, A, Boruch, RF, Ganzalez Castro, F, Gottfredson, D, Kellam, S, Moscicki, EK, Schinke, S, Valentine, JC, & Ji, P (2005). Standards of evidence: Criteria for efficacy, effectiveness and dissemination. Prevention Science, 6(3), 151-175.