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One Tax That Pays Off

August 03, 1989

In a study a few years ago, economist Jeffrey E. Harris of the Massachusetts Institute of Technology found solid evidence that higher cigarette prices led to reduced cigarette consumption. The state Board of Equalization, reporting on cigarette tax revenues since voter-approved Proposition 99 raised the cigarette tax by 25 cents a pack, underscores Harris' findings.

Cigarette purchases in California so far in 1989 are down more than 10% compared to a year ago, even allowing for stockpile purchasing by consumers before the tax hike took effect. The national decline in the same period was only 4%. Either confirmed smokers are smoking less because of higher prices or potential smokers have been dissuaded from even starting.

This is what tobacco companies feared would happen and it's why they poured tens of millions of dollars into efforts to defeat Proposition 99. It's also what the American Cancer Society and other supporters of the measure hoped would occur. As a result of the new disincentive to smoking, some of those 3,000 Americans who each day could be expected to become first-time smokers are staying clear of the addiction. The lives of a lot of people will thus be extended, and some small part of the enormous health-care and lost-productivity costs associated with smoking--$65 billion a year, says Congress' Office of Technology Assessment--will be reduced. Former Surgeon General C. Everett Koop hoped to see a "smoke-free" society by the year 2000. The nation is still a long way from making that a realistic goal. But slowly, slowly, it does seem to be heading in the right direction. Higher cigarette taxes seem to be one effective means for helping to move it along.

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