Tobacco Taxes and the Anti-Smoking Media Campaign: The California Experience

Teh-wei Hu, Hai- yen Sung and Theodore E. Keeler.

No 94-225, Economics Working Papers from University of California at Berkeley

Abstract: In 1988, California voters enacted Proposition 99, increasing the tax on cigarettes by 25 cents per pack effective January 1989. Proposition 99 also earmarked 20% of the revenue raised by this new tax for an anti-smoking media campaign and other educational programs to reduce tobacco use. The purpose of this paper is to examine the relative effects of taxation versus the anti-smoking media campaign on cigarette sales. Quarterly sales data reported by the California State Board of Equalization between 1980 and 1992, adjusted for seasonal variations and time trends, show that sales of cigarettes were reduced by 1333 million packs as a result of the additional 25-cent tax, while the anti-smoking media campaign reduced cigarette sales by 232 million packs during the same period, July 1990- December 1992. The combined effects of taxes and the anti-smoking media campaign during the 4-year post Proposition 99 period resulted in 1.565 billion fewer packs of cigarettes sold in California. The magnitude of those effects is influenced by the magnitude of taxes compared with the amount of the anti- smoking media campaign budget.

Date: 1994-01-01
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