Fiscal Impact of Smoking Cessation in Thailand: A Government Perspective Cost-Benefit Analysis

Abstract

We evaluate the broader public economic consequences of investments in smoking cessation that change lifetime productivity, which can influence future government tax revenue and social transfer costs and health care spending. The analysis applies a government perspective framework for assessing the intergenerational relationships between morbidity and mortality and lifetime tax revenue and social transfers received. Applying smoking prevalence in Thailand, a cohort model was developed for smoker and former smokers to estimate impact on lifetime direct taxes and tobacco taxes paid. Age-specific earnings for males and wage appropriate tax rates were applied to estimate net taxes for smokers and former smokers. Introducing smoking cessation leads to lifetime public economic benefits of THB13 998 to THB43 356 per person depending on the age of introducing smoking cessation. Factoring in the costs of smoking cessation therapy, an average return on investment of 1.35 was obtained indicating fiscal surplus generated for government from the combined effect of increased tax revenues and of averting smoking-attributable health care costs.