Many governments
have introduced excise taxes on cigarettes in order to reduce
the consumption of cigarettes. Money collected from the
cigarette taxes are frequently used to pay for tobacco use
prevention programs, therefore making it a method of
internalizing external costs.
In 2002, the Centers for Disease Control and Prevention said
that each pack of cigarettes sold in the United States costs the
nation more than $7 in medical care and lost productivity.
That's over $2000 per year/smoker. Another study by a team of
health economists finds the combined price paid by their
families and society is about $41 per pack of cigarettes.
Substantial scientific evidence shows that higher cigarette
prices result in lower overall cigarette consumption. Most
studies indicate that a 10% increase in price will reduce
overall cigarette consumption by 3% to 5%. Youth, minorities,
and low-income smokers are two to three times more likely to
quit or smoke less than other smokers in response to price
increases. Smoking is often cited as an example of an inelastic
good, however, i.e. a large rise in price will only result in a
small decrease in consumption.
Many nations have implemented some form of tobacco taxation. As
of 1997, Denmark had the highest cigarette tax burden of $4.02
per pack. Taiwan only had a tax burden of $0.62 per pack.
Currently, the average price and excise tax on cigarettes in the
United States is well below those in many other industrialized
nations.
The cigarette taxes vary from state to state in the United
States. For example, South Carolina has a cigarette tax of only
7 cents per pack, while Rhode Island has a cigarette tax of
$2.46 per pack. In Alabama, Illinois, Missouri, New York City,
Tennessee, and Virginia, counties and cities may impose an
additional limited tax on the price of cigarettes. Due to the
high taxation, the price of an average pack of cigarettes in New
Jersey is $6.45, which is still less than the approximated
external cost of a pack of cigarettes.
In Canada, cigarette taxes have raised prices of the more
expensive brands to upwards of ten CAD$.
In the United Kingdom, a packet of cigarettes typically costs
between £4.25 and £5.50 ($8.50/$11.00) depending on the brand
purchased and where the purchase was made. The UK has a strong
black market for cigarettes which has formed as a result of the
high taxation, and it is estimated that 25-30% of all cigarettes
smoked in the country avoid UK taxes.
Restrictions on cigarette advertising >>
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Tobacco smoking
Methods of smoking
Health effects
1.
Establishing a link between smoking and health effects
2. Health risks of smoking
2.1 Carcinogenicity
2.2 Effects on the heart
2.3 Smoker's attitudes
3. Passive smoking
4. Somatic and psychological effects
5. Mood and anxiety disorders
6. Health benefits of smoking
Effects of the habit and
industry on society
1. Effect on healthcare costs
2. Tobacco and other drugs
3. Advertising
4. Peer pressure
5. Parental smoking
6. Smoking in movies and television
7. The use of smoking to project an image
Religious views
on smoking Smoking cessation
Legal issues and
regulation
1. Age restrictions
2. Taxation
3. Restrictions on cigarette advertising
4. Package warnings
5. Smoking bans
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