The economics of cigarette taxation essay

Tobacco taxation, which affects both public health and public finance, is especially contentious. Valuing present consumption higher than future outcomes—a positive rate of time preference—is common to most economic contexts. Exponential Discounting in the Traditional Approach Time preference—the principle that individuals value the present more than the future—is fundamental to economic analyses of decisions involving any time horizon, including health-related decisions.

Taxes can serve as a self-control device to help reduce tobacco use and enable successful quit attempts. You could argue that smokers already pay the social cost of smoking given the high level of current tax.

Furthermore, with the imposition of higher tax rate on cigarettes and other tobacco products, cigarette manufacturers start to produce socially accepted volume of cigarettes and other tobacco products in the market, thereby fulfilling the objective of the government — equity in the distribution of welfare between consumers and producers.

On the other hand, this rising of cigarette prices would provide enough room for the government to discourage the purchase of cigarette in the market. This will enable the government to spend money on health care or on campaigns to encourage people to stop smoking. With the combined forces of higher production costs and low supply of cigarettes in the market, while the demand for cigarette is high, price of cigarette in the market will surely increase.

Considering that youth smokers are sensitive to price changes, the said new cigarette tax rate in New York City would cut down the demand of youth on cigarettes.

Showing rise in tax rates on cigarettes. Evaluate the economic case for and against the UK government further increasing the tax on tobacco in order to reduce smoking. Any increase on the prices of cigarette in the market would deliberately cut the amount of utilities that minor-age smokers derive from consuming cigarettes, thus having a lower welfare.

The Economics of Cigarette Taxation Essay Sample

All cigarettes, cigars, and other tobacco related products are subjected to the above mentioned tax schemes of the Californian government.

Through cigarette taxes, e. Oftentimes, the amount of tax being imposed by the government is equal to the negative externality that cigarette producers impose to the society. Such taxes are likely to be more equitable for poorer subgroups than traditional economic analysis suggests, which would strengthen the case for increased tobacco taxation globally.

In terms of Cost and Benefit Analysis of increasing the excise tax for cigarettes in the country, given the case of California and New York and the affected parties, it is therefore clear that such policy provision is beneficial to the society as a whole since it promotes health security on the part of both smokers and non-smokers and provide the government with higher revenues.

A Behavioral Economics Perspective on Tobacco Taxation

A growing international consensus favors measures to reduce tobacco use in both developed and developing countries 12 despite the controversy such policies often engender. Cigarettes are a demerit goodtherefore, consumers may underestimate the costs of smoking — e. One way by which the government attacks this problem on cigarette smoking would be to tighten their tax policies on cigarettes and other tobacco related products.

Therefore the best argument for increasing taxes is the normative judgement that smoking is bad for people and the government should intervene to reduce demand. Given a limited supply of cigarettes in the market as a result of imposing tax on cigarettes, the volume of cigarette smokes in the environment is expected to decrease leading to welfare improvement on the part of those non-smokers and smokers [in terms of health value].

Alternatively, they could lead to lower tax rates, e.The Economics of Illicit Drugs Essay - In this essay I will define drug abuse and show the economic impact of the sales of illicit drugs.

Tax revenue serves as the government income due to taxation. Therefore, as cigarette taxes increase so does the government income. Sincethirty-one states have increased cigarette taxes (Capehart. Taxation and price controls have a wide range of affects on the economy; everything from an increase in costs to the reduction of the supply.

With gas prices in the news everyday I am sure that many individuals will pick that topic to write about.3/5(1).

Should taxes on cigarettes be increased?

Economic studies of taxation typically estimate external costs of tobacco use to be low and refrain from recommending large tobacco taxes.

Behavioral economics suggests that a rational decision-making process by individuals fully aware of tobacco's hazards might still lead to overconsumption through.

Should taxes on cigarettes be increased?

An optimal level of excise taxation on tobacco products will reduce the prevalence of smoking, the consumption of tobacco, and the long-term health consequences of tobacco use. Taxation on cigarette smoking. Economics Essay Writing Service Free Essays More Economics Essays Examples of Our Work Economics Dissertation Examples.

Economics Essay - Definition of Topic: Economics is the study of supply and demand. It defines the ways that human beings allocate resources and how resources are distributed amongst a market.

Tax revenue serves as the government income due to taxation. Therefore, as cigarette taxes increase so does the government income. Since. Effects of Taxation on Cigarette Smoking Essay. Taxation on Cigarette Smoking In economics the demand elasticity refers to the sensitivity of the quantity demand for a product to the changes in price.

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The economics of cigarette taxation essay
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