2009-03-22

Taxation of cigarettes

Cigarettes are an important resource of tax revenue in many localities. This fact has historically been an obstacle for health groups seeking to discourage cigarette smoking, since governments seek to maximize tax revenues. In addition, some countries have made cigarettes a state monopoly, which has the same effect on the position of government officials outside the health field. In the United States, the states partly determine the rate of cigarette taxes, and states where tobacco is a significant farm product tend to tax cigarettes least. It has been shown that higher prices for cigarettes discourage smoking. Every 10 percent raise in the price of cigarettes reduced youth smoking by about seven percent and overall cigarette utilization by about four percent. Thus increased cigarette taxes are proposed as a means to reduce smoking.In the UK, many people now illegally import cigarettes, or buy those illegally imported, due to the increasing tax. A packet is less than half the price in some other countries, making illegal importers a large profit, while still providing comparatively very cheap cigarettes. The average price for 20 legal cigarettes is £5.20, while imported packs are sold for less than £3; this is due to the fact that the large majority of the sale price of a legitimate pack is tax.

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