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Hai-Yen Sung, PhD, Teh-wei Hu, PhD, Michael Ong, MD, PhD, Theodore E. Keeler, PhD and Mei-ling Sheu, PhD

Hai-Yen Sung is with the Institute for Health and Aging, School of Nursing, University of California, San Francisco. Teh-wei Hu is with the School of Public Health, University of California, Berkeley. Michael Ong is with the Center for Health Policy and the Center for Primary Care and Outcomes Research, Stanford University, Palo Alto, Calif. Theodore E. Keeler is with the Department of Economics, University of California, Berkeley. Mei-ling Sheu is with the Institute of Health Care Administration, Taipei Medical University, Taiwan.

Correspondence: Requests for reprints should be sent to Hai-Yen Sung, PhD, Institute for Health and Aging, University of California at San Francisco, 3333 California St, Ste 340, San Francisco, CA 94118 (e-mail: sungh{at}itsa.ucsf.edu).

Objectives. We evaluated the combined effects on California cigarette consumption of an additional 50¢ per pack state tax imposed by Proposition 10 of January 1999 and a 45¢ per pack increase in cigarette prices stemming from the Master Settlement Agreement (MSA) of November 1998.

Methods. We used quarterly cigarette sales data for the period 1984–2002 to estimate a time-series intervention model adjusting for seasonal variations and time trend.

Results. Over the period 1999 through 2002, the combined effect was to reduce cigarette consumption by 2.4 packs per capita per quarter (1.3 billion packs total over the 4-year period) and to raise state tax revenues by $2.1 billion. These effects were similar to the effects of a 25¢ per pack tax increase enacted by Proposition 99 a decade earlier, although with decreased relative effectiveness as measured by percentage of reduction in cigarette consumption divided by percentage of increase in taxation (–0.44 vs –0.60).

Conclusions. A major increase in price through taxation and the MSA provided a strong economic disincentive for smokers in a state with a low smoking prevalence. This effect could be reinforced if part of the MSA payments were devoted to tobacco control programs.

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