Potential Effects on Tobacco Tax Revenues of a Ban on the Sale of Flavored Tobacco Products: 2024 Update

This Report was written by Frank J. Chaloupka. The report uses evidence from Canada, Massachusetts, California, and the European Union to evaluate the potential effects of a ban on the sale of flavored tobacco products on tobacco tax revenue. Modeling the impact of a comprehensive flavor ban in the United States on tax revenues and public health, Chaloupka finds that such a policy would reduce tax-paid cigarette sales by 19.2%, varying from state to state. As a result, tax revenues would fall by 19.1% overall, between 3.0% in Alaska and 30.2% in Delaware. These estimates, however, is based on limited data and is likely to overstate actual declines as they do not consider substitution between tobacco products or users who relapse after quitting. There would be significant public health benefits following this ban. 5.6% of menthol smokers, or more than 420,000 adults, would quit smoking in the short run, thus reducing the number of deaths by over 98,000. Further, this ban would deter young people from taking up smoking, which would increase the public health benefits. The reduction in tobacco use would also decrease Medicaid costs by $2.5 billion the year after implementation and decrease lifetime smoking-attributable health care costs by over $4.4 billion among current menthol smokers. 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.