CBO – Raising the Excise Tax on Cigarettes: Effects on Health and the Federal Budget

Raising the Excise Tax on Cigarettes: Effects on Health and the Federal Budget, June 2012

  • “The federal government spends roughly $1 trillion on health care programs each year, so it is easy to imagine that policies that promote a healthier population could have a significant impact on the federal budget. This study uses a policy to discourage smoking as an example for estimating the overall impact on the federal budget of a policy intervention to improve health. Specifically, CBO analyzed the budgetary effects of a hypothetical increase of 50 cents per pack in the federal excise tax on cigarettes and small cigars (from $1.01 to $1.51 in fiscal year 2013, with the increase adjusted each year to keep pace with inflation and, in the long term, with the growth of people’s income). Of course, if lawmakers were to consider raising that federal excise tax—or adopting other policies that would promote a healthier population—their decisions would most likely depend on various considerations besides the effects on the federal budget.”
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