The role of tobacco taxes in starting and quitting smoking
The annual five per cent in real terms increase in tobacco taxes proposed in the recent White Paper on smoking has reaffirmed the commitment of successive United Kingdom governments to above inflation increases in tobacco taxation to encourage people to stop smoking. This paper presents evidence on the determinants of starting and quitting smoking using data from the British 'Health and Lifestyle Survey' and is the first to identify tax elasticities for starting and quitting smoking using British data. Self-reported individual smoking histories are coupled with a long time series for the tax rate on cigarettes to construct a longitudinal data set. Estimates are obtained for the impact of above inflation tax rises on the age of starting smoking and the number of years of smoking. The estimates of the tax elasticity of the age of starting smoking are +0.16 for men and +0.08 for women. The estimates of the tax elasticity of quitting are - 0.60 for men and -0.46 for women. These are robust to different specifications.
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