Tobacco use: the impact of prices

Cigarette smoking continues to be a leading cause of death in the United States, imposing substantial measurable costs to society. Smoking killed over 440,000 people in the United States each year during the period 1995-1999. If current smoking trends continue, over 5 million people currently younger than 18 will die prematurely from tobacco-related diseases. Increases in excise taxes have been shown to be effective in reducing smoking among youth. However, the adoption of tax increases in any jurisdiction is susceptible to many challenges. Furthermore, smuggling of tobacco products and sales of tobacco products over the Internet threaten the effectiveness of tobacco tax increases. This article discusses the effectiveness of excise tax increases on prevention and reduction of smoking. It also discusses factors that influence the legislative adoption of such increases. Finally, it examines potential threats to the use of tobacco taxes as a prevention tool.