The Effect of an Excise Tax Increase on Philip Morris Sales

A 1982 Philip Morris memo titled The Effect of an Excise Tax Increase on Philip Morris Sales analyzes the effect of various types of price increases on the domestic market for cigarettes. The author is Myron E. Johnston of PM's marketing department. Johnston concludes that increasing the tax on cigarettes will prevent young people from taking up smoking and will induce more smokers to quit and that "those who are dissnaded from beginning to smoke would probably never become smokers." Johnston concludes that prices increases have virtually no effect on females and the most effect on young males. Johnston states that "the absolute number of 15-19 year-olds has been declining at the rate of three percent per year," and "it becomes clear that the importance of the young as consumers has been declining for some time..."[1]