...Cigarette tax measure may have unintended consequences | | | | Matt Evans On the surface, this November's Ballot Measure 44 is simplicity itself. The measure will increase taxes on cigarettes by 30 cents per pack, as well as on other tobacco products, and the revenue raised will be dedicated to the Oregon Health Plan and tobacco use reduction programs. What could be more straightforward? However, the measure raises a host of interesting issues that voters should weigh prior to casting their votes. Most important, of course, is the core of the measure, its purpose: to raise money for the Oregon Health Plan, ostensibly to offset costs the plan incurs from smoking-related illnesses. State revenue estimators understand that anytime you raise the tax on something, you will get less of it. This is certainly true in the case of Ballot Measure 44 and its effect on cigarette smoking. In fact, the State Legislative Revenue Office estimates that cigarette use will decline about 4.5 percent due to the increased taxation. In a series of four steps over the past 17 years, Oregon has raised the tax on cigarettes from 9 cents per pack to the current 38 cents. Each of these tax increases represented a smaller amount per pack than Measure 44's 30 cents. In every instance, tobacco use has fallen by more than the current projection of 4.5 percent. In fact, tobacco use fell an average of almost 9 percent--twice the state's estimate--after those four cigarette tax increases. The...
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...Taxation On Cigarette Smoking Economics Essay In the following paper you will be able to see who is likely to be more affected by tax increases on cigarettes: all adults or young adults. You will also be able to see how we can reduce the effects of cancer by reducing the cost of other tobacco products. You will also see long term elasticity of demand for cigarette smoking and what does this mean for the likely impact of taxes on long-term cigarette use and do you think taxing can be effective in decreasing the use of alcohol? Explain your answer using economic theory The people that are mostly affected by the increases in tax on cigarettes according to Frank J. Chaloupka would be the youth and Adults. The single most consistent finding of many econometric studies of the issue of cigarettes price being increased would lead to a drop in smoking. The ten percent increase in cigarettes price would overall drop the consumption of cigarettes sales by fiver percent. (Chaloupka, p. 3) By increasing the price in cigarettes it would most likely affect the youth and young adults do to the price increase. According to Study in 1996 by Chaloupka and Grossman they confirmed the earlier studies that the are three times as sensitive to the price increase then the adults (Chaloupka, p. 4) because they don’t have money like adults would have. Over all with the tax increase we will see a decrease in overall sales of cigarettes. To have the great effect on reducing cancer from the use of tobacco...
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...high-risk subpopulations is important for understanding the reach and effectiveness of such strategies. Increased tobacco taxes, passed on to consumers in the form of higher cigarette prices, provide an economic disincentive to those who smoke or may be contemplating smoking. Indeed, evidence from this knowledge synthesis strongly supports increasing cigarette prices through tobacco taxation as a powerful strategy for achieving major reductions in smoking among some, but not all, high-risk populations. This is a highly effective policy tool for reducing smoking participation and consumption among youth, young adults and persons of low socioeconomic status. In contrast, major gaps exist in our knowledge about the impact of price on persons diagnosed with mental health or non-nicotine substance abuse disorders, heavy and/or long-term smokers. Raising cigarette prices is an effective tobacco control policy in reducing smoking among youth. While most studies of young adults found that increased prices also result in reductions in smoking behavior, the magnitude tends to be smaller than for youth. Chaloupka and Pacula argue that because tobacco is an addictive substance, response to increased prices will occur more slowly than for non-addictive goods; therefore long-term gains may be larger than short-term gains. The impact of increased price on smoking initiation among youth and young adults is less clear. Also, differential responses to price by youth and young adults were associated with...
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...Abstract Cigarette and Tobacco taxation has been a hot topic for years. Typically, the taxing of this product is accepted as there are health concerns associated with the consumption of tobacco products. The concept of raising cigarette taxes aligns with goals of increasing revenue for local, state and federal governments, and also works to increase the overall public health of the country. Although the taxation is widely accepted, there are concerns associated with who the taxation effects primarily, how funds are being utilized and issues with meeting budget goals with the earned revenue. This paper addresses each of these topics in an effort to identify the effectiveness of cigarette and tobacco taxation. Introduction The concern associated with the health risks of tobacco use and cigarettes began as early as the 1930’s. The ill effects of tobacco were studied by epidemiologists in long term case studies to assess the increase of lung cancer mortality to smoking. The findings were considered merely casual by Surgeon General Leroy Burney in 1957. As a few years passed, the concern between the relationship of smoking and health grew. This led to The American Cancer Society, The American Heart Association , The National Tuberculosis Association and the American Public Health Association collaborating together to address a letter to President Kennedy. In this letter they asked for a call to action on the issue of cigarette smoking. The Kennedy Administration...
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...Tobacco Taxation 1 Tobacco taxation is a hot topic and all 50 state governments have enacted taxes on cigarettes, and many have raised their taxes several times. Taxes on cigarettes are a way governments can achieve two social objectives; the first objective is to reduce the number of citizens who smoke. The government issuing the cigarette tax hopes that the rise in the cost of a pack of cigarettes will persuade people to quit smoking. The second objective is to raise government revenue. A cigarette tax, like any other tax, increases the amount of revenue governments can spend on social programs. Where there’s smoke, there’s taxes — especially for New Yorkers. In a 2010 budget move officials say will generate $440 million in revenue, the state legislature passed a bill that gave New York the highest cigarette tax in the country. On July 1, 2011 every pack sold in the state cost an extra $1.60, raising the total state tax to $4.35, pushing the average cost of a pack up to $9.20. For New York City residents, the cost of a pack will now come out to close to $11 — a $2 rise from just over a year ago. The $440 million in revenue will benefit health care programs, AIDS drugs subsidies, tobacco cessation programs and $71.6 million will go to the state cancer research center in Buffalo. Supporters also applaud the health benefits, saying it will reduce the number of smokers by tens of thousands of people. Tobacco consumption is the leading cause of preventable death in many...
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...demand of tobacco use has constantly increased for many years and significant numbers of Filipino youth are smokers. In effect to the high levels of tobacco use, the Philippines had considerably facing adverse health issues and economic consequences from tobacco. With the current low tobacco product taxes and prices in the Philippines, significant increases in tobacco taxes will recline tobacco use and its harmful effects on health and economic consequences while directly generating new revenues. Tobacco Use and Its Consequences According to recent statistics, 30% of most adult Filipinos use some form of tobacco product, with 27.9% smoking manufactured cigarettes and 22.5% recorded daily smoking. Predominantly men smokes and about one in ten women are also tobacco users. The current population estimates, roughly 19 million adults consume tobacco in the Philippines. The socio-economic gradients in smoking prevalence are strong in the Philippines, coming from the lower socioeconomic sector two or more times as likely to smoke as those in higher socioeconomic sector. Tobacco use among the youth sector is a significant problem in the Philippines with 22.7% of 13 to 15 year olds in 2007 reporting using some tobacco product, and 17.5% reporting cigarette smoking. Tobacco use among girls has been increasing, raising concerns about significantly increased prevalence among women in future years. Most Filipino youth are regularly exposed to tobacco smoke at their own homes (54.5%)...
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...During economic hardship, many “sensitive” topics, such as tobacco, drugs and alcohol are always on the table for debate; since they influence and impact our personal lives, people’s beliefs and the economy. As the United States of America continues on its present path of accumulating a deficit, many political opinions and justification will be voiced to clarify the excessive funds allocated to aid various tobacco, drugs and alcohol programs/budgets. These programs includes, but not limited to: education and awareness; local support groups; rehabilitation centers to medical finance assistance for care and medication. The programs listed above can easily be justified by local, state and/or national government bodies, but how about monies that are being missed used and/or irrelevant in helping society, which I like to, refer them as “scam expenses”. Tobacco products in the United States have influence two major problems in today’s economy. First, in recent years, numerous state governments have enacted higher tax rates on cigarettes. The governments overall explanation of higher tariff of tobacco products would hopefully lead to a decrease smoking rates. However, some disagree and different publications note the increase in taxes was solely for the purpose of increasing revenue. Overall state tax revenue from tobacco sales have dwindled in recent years in states like New York, which presently has the highest state tax on cigarettes in the United States. At first glance, people...
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...Tool 3. Demand Analysis Economic Analysis of Tobacco Demand Nick Wilkins, Ayda Yurekli, and Teh-wei Hu DRAFT USERS : PLEASE PROVIDE FEEDBACK AND COMMENTS TO Joy de Beyer ( jdebeyer@worldbank.org) and Ayda Yurekli (ayurekli@worldbank.org) World Bank, MSN G7-702 1818 H Street NW Washington DC, 20433 USA Fax : (202) 522-3234 Contents I. Introduction 1 Purpose of this Tool 1 Who Should Use this Tool 2 How to Use this Tool 2 II. Define the Objectives of the Analysis 4 The Reason for Analysis of Demand 4 The Economic Case for Demand Intervention 4 Analysis of Demand for the Policy Maker 5 Design an Analysis of Demand Study 6 Components of a Study 6 The Nature of Econometric Analysis 7 Resources Required 7 Summary 8 References and Additional Information 8 III. Conduct Background Research 9 IV. Build the Data Set 11 Choose the Variables 11 Data Availability 11 Data Types 12 Prepare the Data 13 Data Cleaning and Preliminary Examination 14 Preparing the Data Variables 14 References and Additional...
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...water” which currently other countries face. (min1500words) 1.0 Introduction The use of cigarette for cigarette has been practiced for centuries. The cigarette plant has been grown in America since the 17th century and cigarette has been used in various forms since. The form of cigarette cigarette by rolling the leaves in fine paper was frequently done by hand for those who practiced it, which limited the habit of cigarette. In 1865, a man named Washington Duke from North Carolina began to roll cigarettes and sell them to others for profit. In 1883, James Bonsack invented a machine that could roll cigarettes and produce thousands per day. Bonsack began a business called the American Cigarette Company, which was the first company to produce cigarettes on a large scale. The mechanized production of cigarettes widely increased the popularity of cigarette, and made cigarettes much more accessible to those who wanted to smoke. Premade cigarettes were available for those who did not wish to roll their own cigarette and cigarettes became available in quantities by the pack. In the late 19th century cigarettes were being sold in packs and marketed throughout the United States. Cigarettes were packaged into containers of ten that were marked with the name of the company that manufactured them and various logos or designs. The packs of ten cigarettes sold for five cents each. Cigarette packages were made of paper with a small card inserted to reinforce the package. These cards...
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...ECONOMICS ASSIGNMENT Topic :TAXATION OF TOBACCO IN INDIA By- Group 3 Q1.Interpret table 3.1 and 3.5.The team is asked to evaluate the future prospects of ITC's tobacco products in the rural areas based on the numbers in these two tables. Write a brief report explaining ITC's rural market potential based on the numbers in the case According to the table 3.1, there is a minimal increase in the excise duty of unfiltered cigarettes in the years 2006-07 and 2007-08 and large increase can be seen in the year 2008-09. In the case of filtered cigarette, there has been a minimal increase or rather we can say that excise duty has been constant for 2007-08 and 2008-09. In the case of bidis, the excise duty is constant for 2006-07 and 2007-08 while decreases in 2008-09. So we can make out from this given table that by increasing the cost of unfiltered cigarette the government wants people to shift from unfiltered to filtered cigarette which will eventually lead to betterment of public health. Secondly, it also helps the Government in the generation of revenue. According to table 3.5, there has been an increase in consumption of bidis and less in cigarettes from 2000-01 to 2005-06. While due to the increase in price of bidis in the year 2006-07, the cigarette consumption of brands likeGold flake, Navy cut, Gold flake small and Wills flake has increased. As the price is increased there would be less consumption of cigarette while on the other side the revenue generated would still...
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...Cigarette Tax in Ireland After reading both articles from The Irish Times written by Eugene Regan and Chris Macey on the issue, should cigarettes be taxed so highly by the government with over 80% of the price of cigarettes is from the taxes that the government set. This issue has caused a lot of discussion amongst us Economists. The argument is whether or not you think cigarettes are price inelastic or price elastic. If you think cigarettes are price inelastic which means that the change in price of cigarettes is disproportionate to the demand for cigarettes then you believe in Mr. Regan opinion. The price elastic view is taken up by Mr. Macey where he believes that the demand for cigarettes is very much dependent on the price. Both articles but forward two very good arguments with very clear reasons why they think the government should try and stop this high growth of criminal activity in the area of smuggling cigarettes into the country. As we found out from the articles that there is a very high percentage of contraband cigarettes in existents in Ireland today due to the very high price set by our government. Over a quarter of all cigarettes smoked in Ireland are illegal. Irish criminal gangs our making huge profits by selling smuggled cigarettes into the Irish black market (worth over €526 million to these criminal gangs) and the government need to do something about. Both articles try to solve this problem with very different views. Reading both articles I do think...
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...Tax Incidence and Elasticity of Demand & Supply In Canada and other free societies, the government provides social services in order to protect the freedoms of its citizens and to uphold the well-being of society as a whole. The government funds these services through revenue acquired by taxing three economic bases: income, wealth and consumption. This report will focus on consumption tax, also referred to as sales tax. Three popular commodities that are subject to sales tax in Canada are gasoline, cigarettes and automobiles. Interestingly, both the consumers and the producers of these items may bear some or all of the sales tax burden. How is this possible? By analyzing the elasticity of demand and supply for automobiles, gasoline and cigarettes, the answer becomes clear. To begin, automobiles are a commodity worth investigating in regards to tax incidence. The automobile is an asset that most Canadians will consider investing in, as nearly everyone requires a means of transportation. Like any other product or service sold, where the tax burden on automobiles falls depends on the commodity’s elasticity of supply and demand. The demand on automobiles is quite elastic in regards to price. In general, the automobile industry in Canada bears an elasticity of demand of about -4. This elasticity of demand is a result of the fact that consumers have a choice when it comes to deciding upon a means of transportation. If one does not like the pricing on a particular make or model...
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...Economics Report and Demand & Supply curve Of cigarettes in Australia Introduction: Recently, there has been a new trend in the tobacco industry in Australian society due to the increased prices of cigarettes, mainly for the reason that “with more than 3.1 million people still smoking today, tobacco still being the leading cause of death by a wide margin… “ (Scollo & Winstanley, p.xiii, 2008). Therefore, this report will illustrate the market structure of Australia tobacco industry, and then make analysis about the price chances on the demand and supplies for cigarettes. The third and the fourth part of the report are about the impacts of this change and some government policies for the tobacco industry, respectively. The market structure: Table 1: Tobacco companies operating in Australia: summary table for 2006-07 | BATA | PMA | ITA | Total revenue ($m) | 1476.7 | 623.3 | 386.5 | Net profit after tax ($m) | 410.7 | 172.6 | 2.7 | Shareholders’ funds ($m) | 632.6 | 403.4 | 25.1 | Total assets ($m) | 2962.1 | 627.5 | 176.7 | Number of employees | >110019 | 691 | 299* | Approximate market share in Australia (%) | 4619 | 34* | 1820 | * Figure for 2006 ** Figure assumed on the basis of market share reported by BATA and ITA, and assuming that a small percentage of the Australian market is accounted for by imported brands. Source: The BRW 1000, BAT website, BATA website, Imperial Tobacco Group Website. The tobacco industry in Australia has been considered...
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...1. ITC to counter illegal cigarette market with a pack of new brands: Kurush Grant, Executive Director Writankar Mukherjee, ET Bureau Aug 28, 2012, 06.18AM IST * (ITC Executive Director…) It is not common for an ITC top executive to talk about the FMCG-to-hospitality major's largest revenue generator, the cigarette business. However, ITC Executive Director Kurush Grant-who oversees its FMCG businesses including cigarettes and is one of the three directors who are considered frontrunners to succeed YC Deveshwar as ITC chairman-says that the company is determined to fight the illegal industry. ITC is test-marketing a portfolio of new cigarette brands such as Flake Deluxe, Scissors Deluxe, Bristol Deluxe, Gold Flake Superstar and Capstan Deluxe simultaneously. Kurush, 54, tells ET that these brands are pitched against illegal cigarettes that account for 20% of the market. Excerpts of an interview: What is the impact of the slowing economy on your FMCG business? FMCG businesses do not easily get impacted by economic issues. Consumers usually postpone large buying decision such as cars and televisions. The only possible impact in the FMCG industry is an increase in downtrading. But as of now, there are no such signs. In the rural market too, the business is not impacted. Bad monsoon can impact farmers, but farm labourers remain unaffected...a lot of factors today impact rural economy such as roll out of programmes like the national rural employment guarantee scheme. Why have you...
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...Differential Effects of Cigarette Price on Youth Smoking Intensity 1Department of Economics, University of Illinois at Chicago 2Health Research and Policy Centers, University of Illinois at Chicago 3Health Economics Program, National Bureau of Economic Research ACKNOWLEDGEMENTS Support for this research was provided by grants from The Robert Wood Johnson Foundation (ImpacTeen – A Policy Research Partnership to Reduce Youth Substance Use) and the Centers for Disease Control and Prevention (Price, Availability and Youth Tobacco Use) to the University of Illinois at Chicago. We thank Lloyd D. Johnston and Patrick J. O’Malley of the University of Michigan’s Institute for Social Research for providing us with selected data from the 1992, 1993 and 1994 Monitoring the Future Surveys. The Monitoring the Future Project is supported by a grant from the National Institute on Drug Abuse Abstract Objectives: Data from the 1992, 1993, and 1994 Monitoring the Future Surveys were used to investigate the differential effects of cigarette price on the intensity of youth cigarette smoking. Methods: Respondents are classified into nonsmokers; individuals who smoked less than one cigarette per day; individuals who smoked one to five cigarettes per day; individuals who smoked one-half pack a day; and individuals who smoked one pack or more a day. A Threshold of Change Model was estimated with information on cigarette prices as the main explanatory variables. Results: Dummy variables...
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