Tax on Cigarettes

Tax on Cigarettes

Introduction

Cigarettes are the most form of tobacco consumed in the world, which is why the focus has largely been on taxes and cigarette prices. The evidence indicates, however, that the higher taxes on other tobacco products can also reduce the usage. The tax rate on tobacco varies from one country to another, but it is the overall price and the more or less affordable tobacco products that matter most. Rising global prices of the products through an increase in taxes on tobacco makes tobacco products less affordable, and results therefore reduce their consumption. Tobacco companies opposed to increases in tobacco taxes based on the argument that higher prices would not result in reduction of smoking among adults or youth.

Discussion

Literature shows that poor and working-class people are likely to be more affected by an increased tax amount on cigarettes (Chaloupka, 1999 and Brandt, 2009). Cigarette taxes are unfair form of taxation because the burden falls disproportionately on poor and working-class people because they buy more cigarettes than any other segment of the society (Brandt, 2009).

It has been years that US is engaged in formulating the key policies regarding the cigarette taxation. It increased per pack federal tax up to 34 cents from 24 cents which has now reached to 39 cents. However, there are certain legislators who want to increase it by $1 and even more than that which will cause more burden to the pockets of the working and poor citizens. Those who desire to restrain smoking are totally assuming that the tax would escalate the price paid by customers, and those who want to penalize tobacco producers expect the price they get to drop.

Nonetheless, cigarette taxes are also said to be flawed by some critics. The supporters of Sin-tax cannot plan raising the administration income along with an effort to decrease the tax on drinking and smoking because both goals were clashing each other. Opponents of President Barack Obama sniff it as an opportunity to attack: The tobacco tax would be paid primarily from lower and middle income groups, the conservative economist Brad Schiller wrote in the "Wall Street Journal". Owing to this fact, those who rarely smoke and drink argue that the income of administration from Cigarette taxes will also decrease; on the other hand, the state hardly shows the income claimed to be gained by cigarette taxation. According to the critics the most basic reason behind lower than the predictable income is that consumers might move to the adjacent places where the taxes are relatively low. The tobacco industry uses this argument is that the majority of smokers in the U.S. is rather poor and could afford tax increases least, outraged Tommy Payne, vice president of the tobacco company Reynolds American.

Taxation is said to be the one of the most crucial mandates of government. On the other hand, they want to reduce the number of cancer victims form the state that is why for its reduction due to tobacco consumption, the government ...