Tobacco Tax Essay

1. World Health Organization. WHO Report on the Global Tobacco Epidemic. World Health Organization: Geneva, Switzerland; 2008.

2. Office of the Surgeon General, Public Health Service, Centers for Disease Control, Office on Smoking and Health, National Center for Chronic Disease Prevention and Health Promotion. Reducing Tobacco Use: A Report of the Surgeon General. Office of the Surgeon General, Public Health Service; Atlanta, GA, USA: 2000.

3. Jha P., Chaloupka F.J., editors. Tobacco Control in Developing Countries. Oxford University Press; Oxford, UK: 2000.

4. Jha P., Chaloupka F.J. Curbing the Epidemic: Governments and the Economics of Tobacco Control. World Bank Publications; Washington, DC, USA: 1999.

5. Moyer C., Maule C., Cameron R., Manske S., Garcia J. Better Solutions for Complex Problems: Description of a Model to Support Better Practices for Health, Version 04.07.27. Canadian Tobacco Control Research Initiative; Toronto, ON, Canada: 2004.

6. Office of the Surgeon General, Public Health Service, Centers for Disease Control, Office on Smoking and Health, National Center for Chronic Disease Prevention and Health Promotion. Reducing Tobacco Use: A Report of the Surgeon General. Office of the Surgeon General, Public Health Service; Atlanta, GA, USA: 2004. [accessed on 10 December 2008]. Available online:

7. Chaloupka F.J., Wechsler H. Price, tobacco control policies and smoking among young adults. J. Health Econ. 1997;16:359–373.[PubMed]

8. Breslau N., Peterson E.L. Smoking cessation in young adults: Age at initiation of cigarette smoking and other suspected influences. Am. J. Public Health. 1996;86:214–220.[PMC free article][PubMed]

9. O’Loughlin J., Gervais A., Dugas E., Meshefedjian G. Milestones in the process of cessation among novice adolescent smokers. Am. J. Public Health. 2008 doi: 10.2105/AJPH.2007.128629.[PMC free article][PubMed][Cross Ref]

10. Cunningham R. Convincing teens to quit smoking, not prevention, is top priority. The Globe and Mail. 2008 17 July;

11. Bader P., Travis H.E., Skinner H.A. Knowledge synthesis of smoking cessation among employed and unemployed young adults. Am. J. Public Health. 2007;97:1434–1443.[PMC free article][PubMed]

12. Tercyak K.P., Rodriguez D., Audrain-McGovern J. High school seniors’ smoking initiation and progression 1 year after graduation. Am. J. Public Health. 2007;97:1397–1398.[PMC free article][PubMed]

13. Dinno A., Glantz S. Tobacco control policies are egalitarian: A vulnerabilities perspective on clean indoor air laws, cigarette prices, and tobacco use disparities. Soc. Sci. Med. 2009;68:1439–1447.[PMC free article][PubMed]

14. Chapman S. Falling prevalence of smoking: How low can we go? Tob. Control. 2007;16:145–147.[PMC free article][PubMed]

15. Picard A. We can’t sacrifice the body in treating mental illnesses. The Globe and Mail. 2007 18 October;

16. Ong M.K., Zhou Q., Sung H.Y. Sensitivity to cigarette prices among individuals with alcohol, drug or mental disorders. Am. J. Public Health. 2010;100:1243–1245.[PMC free article][PubMed]

17. Saffer H., Dave D. Mental Illness and the Demand for Alcohol, Cocaine and Cigarettes; Working Paper No. 8699. National Bureau of Economic Research; Cambridge, MA, USA: 2002.

18. Lasser K., Boyd J.W., Woolhandler S., Himmelstein D.U., McCormick D., Bor D.H. Smoking and mental illness: A population-based prevalence study. JAMA. 2000;284:2606–2610.[PubMed]

19. Siahpush M., Heller G., Singh G. Lower levels of occupation, income and education are strongly associated with a longer smoking duration: Multivariate results from the 2001 Australian National Drug Strategy survey. Public Health. 2005;119:1105–1110.[PubMed]

20. Godtfredsen N.S., Prescott E., Osler M. Effect of smoking reduction on lung cancer risk. JAMA. 2005;294:1505–1510.[PubMed]

21. Levy D.T., Romano E., Mumford E. The relationship of smoking cessation to sociodemographic characteristics, smoking intensity, and tobacco control policies. Nicotine Tob. Res. 2005;7:387–396.[PubMed]

22. Thompson B., Thompson L.A., Thompson J., Fredickson C., Bishop S. Heavy smokers: A qualitative analysis of attitudes and beliefs concerning cessation and continued smoking. Nicotine Tob. Res. 2003;5:923–933.[PubMed]

23. Samji H., Wardman A.E.D. First Nations communities and tobacco taxation: A commentary. American Indian and Alaska Native Mental Health Research. 2009;6:1–10.[PubMed]

24. Wardman A.E.D., Khan N.A. Registered Indians and tobacco taxation: A culturally-appropriate strategy? Can. J. Public Health. 2005;96:451–453.[PubMed]

25. Van Wynsberghe R. Paper on First Nations Tobacco Tax Strategy. First Nations and Inuit Peoples of Canada and Tobacco Taxation; Vancouver, BC, Canada: 2005. [accessed on 24 August 2008]. Available online:

26. Matheson J. Estimating Price Elasticity for Tobacco in Canada’s Aboriginal Communities. Job Market Paper. 2010. [accessed on 31 January 2011]. Available online:

27. Bader P., Boisclair D., Cohen J., Prabhat J., Luk R., Perley M., Ferrence R. Effects of Tobacco Taxation and Pricing on Smoking Behavior in High Risk Populations: A Knowledge Synthesis. The Ontario Tobacco Research Unit; Toronoto, ON, Canada: 2008. Prepared for Canadian Tobacco Control Research Initiative, 1 January 2009. (available on request from corresponding author) [PMC free article][PubMed]

28. Statistics Canada. Census Family Status (6), Age Groups (20) and Sex (3) for the Population in Private Households of Canada, Provinces, Territories, Census Metropolitan Areas and Census Agglomerations, 2006 Census—20% Sample Data. Statistics Canada; Ottawa, ON, Canada: 2006. [accessed on 1 December 2008]. Available online:,97154&RL=0&S=1&ShowAll=No&StartRow=1&SUB=0&Temporal=2006&Theme=68&VID=0&VNAMEE=&VNAMEF=

29. US Census Bureau. We the People: American Indians and Alaskan Natives in the US, Census 2000 Special Reports. US Census Bureau; Washington, DC, USA: 2006. [accessed on 11 December 2008]. Available online:

30. Report on the State of Public Health in Canada, 2008. The Public Health Agency of Canada; Ottawa, ON, Canada: 2008. [accessed on 10 December 2008]. Available online:

31. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics. Health, United States, 2007. Centers for Disease Control and Prevention; Atlanta, GA, USA: 2007. [accessed on 10 December 2008]. Available online:

32. Centers for Disease Control and Prevention. Adult Cigarette Smoking in the United States: Current Estimates (updated November 2007) Centers for Disease Control and Prevention; Atlanta, GA, USA: 2007. [accessed on 8 December 2008]. Available online:

33. Effective Public Health Practice Project Quality Assessment Tool, Effective Public Health Practice Project, Canada 2003. Public Health Services; Hamilton, ON, Canada: 2003. [accessed on 15 July 2008]. Available online:

34. Auld M.C. Causal effect of early initiation on adolescent smoking patterns. Can. J. Econ. 2005;38:709–734.

35. Boudarbat B., Malhotra N. The hazard of starting the smoking habit among the Canadian population. Int. J. Econ. Perspect. 2009;3:93–106.

36. Cawley J., Markowitz S., Tauras J.A. Body weight, cigarette prices, youth access laws and adolescent smoking initiation. E. Econ. J. 2006;32:149–170.

37. Cawley J., Markowitz S., Tauras J.A. Lighting up and slimming down: The effects of body weight and cigarette prices on adolescent smoking initiation. J. Health Econ. 2004;23:293–311.[PubMed]

38. DeCicca P., Kenkel D.S., Mathios A.D. Cigarette taxes and the transition from youth to adult smoking: Smoking initiation, cessation, and participation. J. Health Econ. 2008;27:904–917.[PubMed]

39. DeCicca P., Kenkel D., Mathios A., Shin Y.J., Lim J.Y. Youth smoking, cigarette prices, and anti-smoking sentiment. Health Econ. 2007 doi: 10.1002/hec.1293.[PubMed][Cross Ref]

40. DeCicca P., Kenkel D.S., Mathios A.D. Putting out the fires: Will higher taxes reduce the onset of youth smoking? J. Polit. Econ. 2002;110:144–169.

41. Dee T.S., Evans W.N. A comment on DeCicca, Kendel, and Mathios. 1998 unpublished data.

42. Douglas S., Hariharan G. The hazard of starting smoking: Estimates from a split population duration model. J. Health Econ. 1994;13:213–230.[PubMed]

43. Forster M., Jones A. The role of tobacco taxes in starting and quitting smoking: Duration analysis of British data. J. Roy Stat. Soc. A. 2001;164:1–31.

44. Glied S. Is smoking delayed smoking averted? Am. J. Public Health. 2003;93:412–416.[PMC free article][PubMed]

45. Glied S. Youth tobacco control: Reconciling theory and empirical evidence. J. Health Econ. 2002;21:117–135.[PubMed]

46. Grignon M., Pierrard B. Youth tobacco initiation and the impact of tobacco price: Evidence from France.

Q. Evaluate the economic case for and against the UK government further increasing the tax on tobacco in order to reduce smoking.

Increasing tax will lead to a fall in demand, although this may only be a small effect because demand is price inelastic. People are addicted and there are no close substitutes.

Cigarettes are a demerit good, therefore, consumers may underestimate the costs of smoking – e.g. they ignore the damage to their own health; this is a reason to try and stop people smoking.

Also, smoking has many negative externalities (passive smoking, the cost to the NHS is estimated to be £1.5 billion) therefore, the social cost is greater than the private cost; if the social cost is greater than the present price, social efficiency can be increased by making smokers pay the true social cost.

Diagram showing the effect of Tax on Cigarettes


A tax shifts the supply curve to the left causing a fall in demand this is more socially efficient because at Q2,  SMC=SMB.

Evidence suggests a higher tax on tobacco have played a role in reducing demand.

Showing rise in tax rates on cigarettes.

Fall in the proportion of people who smoke in Great Britain.

Another advantage of increasing tax on cigarettes is that it will lead to increased tax revenue. This will enable the government to spend money on health care or on campaigns to encourage people to stop smoking. Alternatively, they could lead to lower tax rates, e.g. VAT.

Arguments against increasing tax on cigarettes

  1. Smokers already pay a lot of tax £7 billion. Also, they do not cost the government much because they die early and save pension and health care spending
  2. Demand is very inelastic and therefore increasing price will only cause a small fall in demand
  3. Higher taxes will increase inequality because the poor will pay a higher % of tax than the rich who are more likely to have given up (However the government can use other taxes to reduce inequality if it is concerned about this)
  4. Higher taxes will encourage people to smuggle illegal cigarettes and avoid paying the tax.

You could argue that smokers already pay the social cost of smoking given the high level of current tax. 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.


0 Replies to “Tobacco Tax Essay”

Lascia un Commento

L'indirizzo email non verrà pubblicato. I campi obbligatori sono contrassegnati *