The impact of California Proposition 99, a major anti-smoking law, on cigarette consumption

Listed in:

• Tax and price in HICs
• Aggregate demand for tobacco products

Abstract

In 1988, California voters enacted Proposition 99, increasing the tax on cigarettes by 25 cents per pack, effective January 1989. Monthly sales data reported by the California State Board of Equalization between 1984 and 1991, adjusted for seasonal variation and time trend, show that consumption of cigarettes in January 1989 was about 25 percent less than would have been expected in the absence of the tax. By December 1989 consumption was reduced to 9.5 percent below the pre-Proposition trend, an amount sustained throughout 1991. Additional taxation and a different form of taxation on cigarettes may further be considered.