Koç University-TÜSİAD Economic Research Forum Working Paper Series 1116
To evaluate the costs and benefits of various anti-smoking policy alternatives including taxation and four cessation programs, accounting for the demographic projections in 2011-2050 in Turkey. Demographic projections are combined with incidence and mortality rates of four major cigarette related diseases, price elasticity of cigarette demand and unit costs of nonprice measures to reduce demand in order to estimate the net present discounted values of policy alternatives. Among policy alternatives that yield the same amount of cigarette consumption, cessation programs yield lower costs to households and the society at large than taxation, while taxation is preferred by the public sector. Net benefit to the public sector as a function of the tax rate is a single-peaked Laffer curve. The public sector can obtain the highest net benefit if it raises the special consumption tax rate from its current level by nearly 9 percentage points. Although intervention programs emerge as the preferred anti-smoking alternatives, more research is needed on estimating the cost-effectiveness and social desirability of taxation and intervention programs in Turkey.