Excise Tax

Taxing cigarette products at the point of sale provides a powerful motivation for many smokers to quit. Increasing the unit price of tobacco, primarily through excise taxes at the state and federal levels, is considered to be effective to increase tobacco use cessation. Higher taxes, according to research, decrease initiation of tobacco use as well.

Increases in the price of tobacco products resulted in decreases in both the number of people who use tobacco and the quantity they consume. It is believed that a 10% increase in the price of tobacco products will result in a 4.1% decrease in the amount of tobacco used by the general population.

When excise taxes on tobacco products are increased at the state or federal level, at least a portion of the tax revenue generated should be dedicated to funding for tobacco cessation programs and services to help smokers quit. Empirical evidence supports the finding that a combination of an excise tax increase and a comprehensive tobacco program results in a sustained decline in tobacco use prevalence. While it is uncommon in the United States for funds generated through tobacco excise taxes to be devoted to tobacco control activities, directing such revenue to efforts that help smokers can result in long-term savings by reducing health costs tied to tobacco-related diseases.