2009 Federal Tobacco Tax Increase Cut Number of Youth Smokers by At Least 220,000 in First Two Months Alone, New Study Shows

Study Comes as Tobacco Industry Spends Nearly $40 Million to Defeat Tobacco Tax Ballot Initiative in California

May. 10 2012

WASHINGTON, DC – The large federal tobacco tax increase implemented on April 1, 2009, reduced the number of youth smokers by at least 220,000 and the number of youth smokeless tobacco users by at least 135,000 in the first two months alone, according to a new study released today by researchers at the University of Illinois at Chicago.

The researchers emphasized that the study measured only the immediate impact of the tax increase through May 2009, and the number of youth prevented from smoking and using smokeless tobacco would be much larger over time.

The study "showed that a large national tax increase can influence youth tobacco use prevalence within a very short time period," the researchers wrote. "Adolescents not only respond to tax policy changes, but the speed of their response is fast. The prevalence of smoking and use of smokeless tobacco… dropped immediately following the tax increase in this study, and statistically significant and meaningful changes could be measured and detected within 30 days of the tax increase."

The study was published online by the National Bureau of Economic Research and can be found at: http://www.nber.org/papers/w18026.

The new study comes as the tobacco industry, led by Philip Morris USA and R.J. Reynolds, is spending nearly $40 million to oppose a June 5 ballot initiative in California (Proposition 29) to increase that state’s cigarette tax by $1 per pack. The initiative would reduce smoking and fund research on cancer and other tobacco-related diseases, as well as tobacco prevention programs.

"This study shows exactly why the tobacco industry is spending so much money to oppose California's Prop 29: They know higher tobacco taxes are very effective at reducing smoking, especially among kids," said Matthew L. Myers, President of the Campaign for Tobacco-Free Kids. "Because the truth is against them, the tobacco companies are spending huge sums on ads to deceive and confuse voters. Californians should ignore their lies and vote yes on Prop 29."

Study Findings

A 2009 law approved by Congress, the Children's Health Insurance Program Reauthorization Act, increased the federal tax rate on cigarettes by 61.66 cents per pack (from 39 cents to $1.0066 per pack) and on moist snuff, the most common form of smokeless tobacco, by 92.5 cents per pound (from 58.5 cents to $1.51 per pound). Taxes were also increased on other forms of smokeless tobacco.

The study investigated the changes in youth smoking and smokeless tobacco use rates following the April 2009 federal tobacco tax increases, using data from the Monitoring the Future survey, an annual national survey of 8th, 10th and 12th grade students. Because the survey is conducted from February through May each year, it coincided with the April 1 tobacco tax increase and provided an effective means to measure the immediate impact.

The study found that the tobacco tax increase had a substantial and immediate impact.

The percentage of students who reported smoking in the past 30 days dropped between 9.7 percent and 13.3 percent immediately following the tax increase, while the percentage who reported using smokeless tobacco dropped between 16 percent and 24 percent (because the survey asked about behavior in the past 30 days, the study used three different models, with different cutoff dates, to fully assess the impact of the tax increase).

Because of the tax increase, there were between 220,000 and 287,000 fewer current smokers and between 135,000 and 203,000 fewer smokeless tobacco users among middle and high school students in May 2009, the study estimated.

The study controlled for other factors that influence youth tobacco use, including individual, family and school characteristics as well as state tobacco control measures, including state cigarette taxes, smoke-free air polices and tobacco control funding.

The study also found that, even as youth tobacco use declined, federal tobacco tax revenues increased by 147 percent in the 12 months following the increase – from $7.1 billion in the 12 months before to $17.5 billion in the 12 months after.

The study "demonstrated that a well-designed, across-the-board tobacco tax policy can delivery both economic and health benefits, and has implications for policymakers at all levels when considering effective tobacco control policies to reduce tobacco use among youth," the researchers wrote.

Support for the study was provided by the Robert Wood Johnson Foundation and the National Cancer Institute.

 

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