Income generation from increasing the excise tax on cigarette would be just a secondary objective of the local officials of New York City. Fall in the proportion of people who smoke in Great Britain.
And in order for the cigarette producers to protect their interests, what they tend to do is to pass the cigarette tax that they received from the government through raising the prices of their cigarettes in the market and cut their volume of production given the limited capital that they have.
A more recent and growing body of economic research suggests that this conventional analysis might be inadequate as applied to tobacco taxation. The value of negative externalities imposed by cigarette producers can be converted into monetary terms through determining the willingness to pay of those non-smokers in exchange for not inhaling cigarette smokes or the cost of ailment of those smokers, which must be added on the production cost of cigarette producers for them to only produce cigarettes at a socially optimal level [where both producers and consumers are well off].
Cigarettes are a demerit goodtherefore, consumers may underestimate the costs of smoking — e. Based from the idea behind externalities, it is a must for the government to impose tax, or other forms of intervention, on negative externality emitting agents in order to attain socially optimal level of supply of a given product, and so with its price and demand.
Individuals might well recognize that tobacco is harmful but act rationally to the extent that rational economic behavior consists in responding to prices in consistent ways, including reducing consumption when prices increase. At the end of the day, cigarette smokers will carry all the burden of cigarette taxes.
On the part of the cigarette retailers, the The economics of cigarette taxation essay of higher cigarette tax in the market would certainly pose higher market uncertainty considering the potential downturn on the demand of smokers for cigarette in the market or the shifting of smokers from consuming commercially available cigarettes to black market cigarettes.
Given that tax is one of the inputs in producing cigarettes in the market, any increase on the tax rate will tend to increase the production cost of manufacturing cigarettes.
In other states where majority of smokers are adults, price increase in cigarettes only made small impact on the total demand for cigarettes in the market. 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.
As for the case of cigarettes and tobacco products purchased outside and shipped to California, either through the mail, telephone, or internet, the consumer is still required to pay the California excise tax directly to the State Board of Equalization.
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. It is also the role of the New York State Department of Taxation and Finance to educate the public as well as to collect tax on untaxed cigarettes and provide legal action to those people who will engage in cigarette tax fraud.
Moreover, consumers also have to pay the California excise tax specifically when they physically bring tobacco or more than cigarettes into California. Cigarettes are a demerit goodtherefore, consumers may underestimate the costs of smoking — e.
Through forcing the prices of cigarettes in the market to rise, the state officials of New York expected sudden downturn on the quantity demanded of cigarettes in their market, especially on the part of minor-age smokers since the said consumer segment is relatively price sensitive compared to other consumer segment of cigarettes.
Through cigarette taxes, e. Economists agree that smokers tend to place a higher value on current rewards from smoking than on future health. Both non-smokers and the government are the only party that will gain welfare improvement from such provision of higher cigarette tax in New York City.
The traditional and behavioral approaches differ in how this time preference is modeled. 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. Evidence suggests a higher tax on tobacco have played a role in reducing demand.
Essentially, there are two types of excise taxes currently being implemented in California namely  the cigarette tax and  the cigarette and tobacco products surtax California State Board of Equalization, You could argue that smokers already pay the social cost of smoking given the high level of current tax.
It is being expected by the local officials of New York City that aroundyouth will be prevented from smoking through the provision of such new cigarette tax scheme. In addition to this, cigarette manufacturers find California to be one of the most profitable markets due to the large population of cigarette smoker in the said state.
In addition to this, the government gets additional revenue from the provision of cigarette tax which can be useful in financing government projects and programs.
Traditional economic models usually predict that the amount of tobacco individuals consume at any given price precisely reflects their private preferences.
A growing international consensus favors measures to reduce tobacco use in both developed and developing countries 12 despite the controversy such policies often engender. 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.
With the estimated discounted costs pack price and perceived harm being higher than the benefit, the smoker in this example would consume less than the whole pack. By the time the consumption of cigarettes and other tobacco products in the market decreased, negative externalities in California, in the form of health threats on smokers and non-smokers, will be minimized BNET Business Network, Taxes charged on cigarettes and other socially undesirable products promotes equity in the distribution of welfare between the consumers and producers through revealing the true and socially optimal price level and production level of a given undesirable product.
Cigarette Tax in California California is one of the many cities housing large number of cigarette smokers in the market. Should taxes on cigarettes be increased? The exponential discounter column of Table 1 and the dotted curve in Figure 1 illustrate this point: By putting enough market pressure for prices of cigarettes in the market to increase, the government expects drop on the level of supply and consumption of cigarettes in the market, thereby, resulting on the promotion of secured health on the part of smokers and non-smokers in the society as well as for the government to generate more revenues.
The way by which distributors pays tax and surtax in California is through the use of tax stamps which are purchased from the Board of Equalization. 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.Economics of Tobacco Taxation in Egypt.
Topics: Tobacco Use and its Consequences in Egypt Supply of Tobacco and Tobacco Products in Egypt Tobacco Control in Egypt Cigarette Taxes and Prices in Egypt The Demand For Cigarettes in Egypt Impact of Cigarette Tax Increases in Egypt Summary and Recommendations I.
Introduction Taxation Essay. 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). cigarette taxation, and the data used in the empirical analysis. The final sections of the paper discuss the empirical model of the determinants of cigarette smoking, the results of.
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. Taxation is one of the most common policies used by the government to reduce demand of any product.
Taxes increase the price of the goods which leads to reduced demand. Goods such as cigarettes have negative externalities and affect the society as a whole. Government uses such policies to reduce.
Effects of 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.Download