Frank Chaloupka Q&A: Study Shows 2009 Federal Tobacco Tax Helped Cut Youth Smoking

May 10, 2012, 2:47 PM, Posted by

file Frank Chaloupka, University of Illinois at Chicago

A new study by researchers at the University of Illinois at Chicago found that in the first 60 days following a 2009 federal tobacco tax, at least 220,000 young people were prevented from using tobacco. The research, which was published online today by the National Bureau of Economic Research and funded by the Robert Wood Johnson Foundation and the National Cancer Institute, demonstrates the substantial and immediate impact of the tobacco tax on reducing youth smoking and youth smokeless tobacco rates.

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.

NewPublicHealth spoke with study co-author Frank J. Chaloupka, PhD, distinguished professor in the division of Health Policy and Administration at the University of Illinois at Chicago School of Public Health.

NewPublicHealth: What were the key study findings?

Frank Chaloupka: We found that the 2009 federal tobacco tax increases led to significant reductions in the number of kids who smoke and who use smokeless tobacco products.

I think the study is really nice in that it shows how quickly the tax affects youth smoking. We estimate somewhere around a quarter of a million kids were deterred from taking up smoking just in the first couple of months following the tax increase.

NPH: The study looked at the short-term impact of the tobacco tax increase. Does the impact grow over time?

Frank Chaloupka: Yes, from the work that’s been done in the past, we know that the higher prices that result are going to have a lasting impact on tobacco use. So, kids who would be taking up tobacco in the future are now going to face these higher prices and they’re going to be deterred from starting as well.

NPH: And, while youth tobacco use has declined because of the tax, government revenues have increased?

Frank Chaloupka: Right, so the tax increase leads to not just reductions in kids smoking but also leads to reductions in adult smoking as people try to quit and many succeed. But even though that happens, you still see significant increases in revenues as a result of the tax increase.

NPH: Does having that increase in revenue add fervor among policymakers to increase tobacco taxes?

Frank Chaloupka: It’s one of the things that I think does help motivate the tax increases, and depending on who you talk to it’s going to have different effects. Governments, at this point, are facing deficits in virtually every state. In showing that significant revenues can be generated from the tax increase, that’s some additional motivation for increasing the tax.

When you talk to people in states where they’re going to be voting on these issues, the big question there is how the revenues get used. And we know the voters are going to be much more supportive of these sorts of tax increases when the revenues get put back into tobacco prevention and cessation activities that really do then add to the public health impact of the taxes. You definitely see that. There have been a number of studies that have looked at those sorts of issues. It shows up pretty clearly in the polling data, and I think that most people are surprised. A significant number of tobacco users will support a tax increase when they know that the money is going to go back to efforts to help tobacco users quit and to keep kids from taking up the addiction.

NPH: How long do the tobacco prevention and cessation benefits for the tobacco tax increase last?

Frank Chaloupka: There are a couple of different things wrapped up in that. The first part is that it really does have a lasting impact when it comes to keeping kids from taking up smoking. Very few people will start smoking as adults. So, with the higher tax, kids are deterred from starting now and become very unlikely to take up smoking in the future.

The higher tax also promotes adults to quit smoking. Many are going to try to quit, some are going to relapse, but you’re going to still see a significant number that do effectively stop smoking. And, because it’s an addictive behavior, once they break that addiction over time, relatively few of them are going to relapse if they’re successful in stopping in response to the price increase.

Eventually, over time, inflation starts to erode the value of the tax increase, so you do need to have regular increases that continue to push up prices beyond people’s increases in income, really to successfully reduce the affordability of tobacco products. In the long run, however, there still is a significant benefit of a one-time tax increase. And further tax increases would be successful in moving them to really be successful in quitting.

NPH: When the Congressional Budget Office measures the impact of policies to address chronic diseases, their estimates usually cover a 10-year period, which makes short-term findings very important. How does this study add to the knowledge base around the importance of investing in prevention more broadly?

Frank Chaloupka: Well, we do have evidence from the work that we’ve done looking at youth tobacco use that when the revenues that are generated from a tax increase of this sort get put back into prevention efforts, you do see additional reductions in tobacco use. So, the tax itself has a big impact in reducing tobacco use. And then if the revenues are used to help adult smokers quit and support programs to keep kids from taking up smoking, you see additional reductions in tobacco use so that the tax itself is a very cost-effective strategy.

NPH: This study was aimed at looking at reductions in tobacco use. Do we also need a study that looks at a reduction in health care costs as a result of reduced smoking from a tax increase?

Frank Chaloupka: We do have studies like that. Some folks at the University of California/San Francisco have been trying to look at the reductions in health care costs that you get from tobacco control activities and tobacco control program funding, and again, show that every dollar that’s invested in tobacco control efforts really does come back in terms of much larger reductions in health care spending. And we’ve done a little bit of work that looks at sort of a broader economic impact and the fact that people are healthier, they live longer lives, and they’re going to be more productive show there’s real economic benefits that come from reductions in tobacco use that result from tax increases and other tobacco control efforts.

>>Related: Read more on the study, and check out an interactive tobacco map for a nationwide picture of continuing state efforts on key tobacco control policies.

This commentary originally appeared on the RWJF New Public Health blog.