The Effect of Cigarette Taxes on Cigarette Consumption

Introduction

The consumption of cigarette and tobacco has been considered perfect consumer good for taxation. As we all aware that previously consumption of cigarette and tobacco was increased but this increased consumption has been gradually reduces due to the due to the anti-smoking campaigns and polices developed by the government. However, almost every country like California, Australia, Taiwan and other countries have implemented taxes on the consumption of cigarette and tobacco through variety of different methods. The motive of government is to generate revenue, nevertheless implementation of taxes have reflected the concern of minimizing the health damage of smoking.

Tax regulation which has ultimately increased the prices and the demand for the cigarettes moreover restricted people for consumption of cigarette and tobacco.

Due to the volumes generated, the taxation on cigarettes is the subject of special attention for the governments that seek to maximize the efficiency of revenue collection and public health policies. Compared to other products, changes in consumption remain relatively elastic and any increase in prices does not necessarily translate into a decline in smoking. Some consumers moving to other tobacco products more weakly taxed (eg rolling tobacco.) or to cigarette smuggling. Indirect revenue is generated through the sale of cigarette.

After the tax bump, revenues jumped to $121 million, due in part to additional taxes paid on existing products. Since then, they've been slowly decreasing, due in part to a large federal cigarette tax hike and the general decline in smoking prevalence resulting from multiple influences, including greater awareness of tobacco's health liabilities. The latest amount, from 2010, was $99 million; still twice the revenue seven years after the increased tax took effect.

The effects of price and smoking risk information on the demand

In this article, the research conducted to see the effect of increase in prices and risk factor on consumption of cigarettes in Taiwan. For this purpose =, the Taiwan bureau of Statistic created model which predicts the coefficients demand elasticity of the cigarettes. This model showed that rise in prices has been more effective way of reducing the consumption of cigarettes propagate more risk information. However, along with this, it was also predicted that increase in price per cigarette pack with NT$5 would reduce the consumption of imported cigarettes as well as domestic with the 3.23 and 4.86 packs per capita, respectively.

Cigarette prices have risen very much in the last couple of years. The most important reason for this is the fact that many states from the US have decided to raise the taxes on tobacco products, including cigarettes. Another big reason for the tax raise in cigarettes is the lost of multibillion dollar suits, which have been registered from people who are against tobacco companies or suffered from their smoking products. There are many smokers who can order their favorite cigarettes avoiding the impact of taxes. The best method of avoiding cigarette taxes is to buy cigarettes online. Tobacco manufacturers who produce premium brands like Camel cigarettes , Marlboro cigarettes ...