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

"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. Such policies might include initiatives that discourage smoking or excessive alcohol consumption, that promote better eating habits and physical activity to reduce obesity, or that encourage compliance with medical and dietary regimens for chronic conditions such as diabetes. In this study, the Congressional Budget Office (CBO) analyzes a policy involving smoking—a hypothetical increase of 50 cents per pack in the federal excise tax on cigarettes and small cigars (adjusted each year to keep pace with inflation and, in the long term, with the growth of people’s income)— to demonstrate the complex links between policies that aim to improve health and effects on the federal budget..."