Getting people to quit smoking through higher taxes is easier than you think

The World Health Organization estimates that smoking causes 6 million deaths every year. In Italy alone, the Ministry of Health reports between 70,000 and 83,000 tobacco-related deaths annually. Evidence also shows that tobacco consumption in this country declined after the smoking ban in public places (the Sirchia Law), only to rise again with the introduction of e-cigarettes and heated tobacco products.

One of the most frequently proposed measures to cut smoking rates is raising excise taxes on cigarettes and other tobacco products. But because this is often an unpopular policy, it’s crucial to ask: Is it effective? To find the answer, together with colleagues Michela Meregaglia, Laura Giudice, and Simone Ghislandi from CeRGAS (Centre for Research on Health and Social Care Management), we conducted a comprehensive literature review  commissioned by Fondazione Umberto Veronesi ETS, which has long been committed to anti-smoking initiatives.

Spoiler alert: Yes, increasing tobacco taxes is an effective way to curb smoking. We found that the vast majority of scientific research confirms that higher taxes lead to lower tobacco demand, less consumption, and a smaller share of the population using tobacco. In fact, a recent meta-analysis compiling all existing evidence shows that a 10% price rise can produce significant effects: a 5.4% drop in demand, and a 1.3% to 2.4% downturn  in the number of smokers, even among younger populations. In other words, raising the price of a €5.40 pack of cigarettes to €5.94 equates to one less cigarette smoked per pack. There is also growing evidence that this leads to real health benefits and gains in life expectancy. For instance, in the United States, tobacco tax hikes have been linked to fewer cancer deaths and lower overall and infant mortality rates.

A deeper dive into scientific literature also reveals that many of the most common objections to raising tobacco taxes don’t hold up. One frequent concern, for example, is that higher taxes will encourage illegal cigarette trade. Actually, the data show that the price of illegal tobacco tends to rise in parallel with legal products. What happens is when higher excise taxes drive up official prices, smugglers don’t aim to gain market share, they just want to make more profit from the same amount of product. In fact, in some countries, like Australia and Vietnam, tax increases were followed by a decline in illegal cigarette sales.

Another common claim is that higher taxes unfairly burden low-income individuals, worsening social inequality. Instead, it’s these very individuals who benefit the most from quitting or cutting back, health-wise. Half of the published studies indicate that health gains are greater among lower socioeconomic groups (by income and education). In the US, for example, a $1 uptick in the price of a cigarette pack had double the effect on people with lower education levels compared to the general population.

A third objection is that tobacco tax hikes harm tobacco farmers and the economies of producer countries. But here too, research from the World Bank tells a different story. Taxing tobacco brings these countries a dual benefit: improved public health and economic development. The reason is that tobacco farming generates comparatively low profits, it’s easily automated, and it carries considerable environmental risks. So even if a bigger tax burden prompted farmers to switch to other crops, this would not be a loss for them or for the country. Quite the opposite.

Compared to other countries, so far Italy has been cautious about using tobacco taxes as a tool for health prevention and public health in general. We’ve implemented modest tax increases that don’t significantly influence behavior and primarily serve to boost revenues for the State. What’s more, Italy’s tobacco excise duties are below the European average: cigarette prices are nearly half of what smokers pay in France and a third of what they find in Ireland. So, we still have ample room to roll out stronger measures that could improve public health and save lives.

Originally published in Fortune Italia