A policy package is proposed to reduce smoking by 40% by increasing cigarette tax, reducing advertising, and implementing a serious sustained health publicity programme. It is estimated that this reduction would have only marginal effects on National Health Service usage, but would result in important savings in sickness benefit and widows' pensions; against these savings are set the extra costs of retirement pensions and a health publicity programme, but it is estimated that the overall effect would be a reduction in Government expenditure together with an increase in tax revenue. There could also be a saving of a quarter million lives by the end of the century and much avoidable illness. THE all-party House of Commons Expenditure Committee's report on preventive medicine 1 includes radical proposals for reducing cigarette smoking which, it suggests, is probably the most urgent task in preventive medicine. Its recommendations include a total ban on advertising except at the point of sale, an annual increase in the real price of cigarettes, and antismoking education directed at specific target groups. These proposals have wide implications for health and also for the economy and for Government revenue and expenditure. There has been much research on the medical aspects of smoking but little quantitative assessment of the effect that a reduction in smoking would have on the economy. The reports of the Royal College of Physicians 2—4 have paid little attention to the economic issues, and political inaction may have resulted, in part, from misconceptions about the economic consequences. It is important to assess some of the implications of a large reduction in smoking, looking first at the evidence on how smoking habits may be changed by the policies suggested and, secondly, at the possible effects on mortality, use of health services, social-security payments, and the Government budget.