Potential Effects on Tobacco Tax Revenues of a Ban on the Sale of Flavored Tobacco Products: 2023 Update

This Report was written by Frank J. Chaloupka. The report uses evidence from Canada, Massachusetts, and California to evaluate the potential effects of a ban on the sale of flavored tobacco products on tobacco tax revenue. Canada implemented a comprehensive national ban on the sale of menthol cigarettes in 2017 while Massachusetts and California implemented a comprehensive bans on the sale of flavored tobacco products in 2020 and 2022, respectively. Modeling the impact of a comprehensive flavor ban on tax revenues and public health, Chaloupka finds that such a policy would reduce cigarette sales by 19.2%, varying from state to state. Although tobacco tax revenues would somewhat fall as a result, there would be significant public health benefits. 5.6% more menthol smokers, or over 485,000 adults, would quit smoking in the short run, thus reducing the number of deaths by over 110,000. Further, this ban would deter young people from taking up smoking, which would increase the public health benefits. The reduction in tobacco use would lead to a substantial decrease in health care costs, including nearly $4 billion in Medicaid costs the year after implementation. The report concludes that a ban on the sale of flavored tobacco products would have financial and public health benefits in the long-term, despite any loss in revenue from tobacco taxes.

Read the 2024 update here.