代写范文

留学资讯

写作技巧

论文代写专题

服务承诺

资金托管
原创保证
实力保障
24小时客服
使命必达

51Due提供Essay,Paper,Report,Assignment等学科作业的代写与辅导,同时涵盖Personal Statement,转学申请等留学文书代写。

51Due将让你达成学业目标
51Due将让你达成学业目标
51Due将让你达成学业目标
51Due将让你达成学业目标

私人订制你的未来职场 世界名企,高端行业岗位等 在新的起点上实现更高水平的发展

积累工作经验
多元化文化交流
专业实操技能
建立人际资源圈

High Taxes on Cigarette: Causes and Effects

2021-10-13 来源: 51Due教员组 类别: Essay范文

51Due教员组今天给各位留学生带来一篇纯原创代写微观经济范文,在经济解释之后,本文阐述了增税的三种可能的困惑。最后,总结全文的主要观点。希望这篇可以帮助到各位留学生,同时需要代写也可以直接联系我们51Due客服vx(vx:Jenny_dynh)进行咨询。

Introduction

The tough issue of reducing the consumption of cigarette has long been great concerns of policymakers and many government leaders. On the basis of a global research, there are approximately 50 per cent young men and 10 per cent young women becoming smokers in recent years (Peto, & Lopez, 2012). In the 20th century, death caused by smoking has accumulated to 100 million cases, most of which occurred in developed countries. If people maintained their smoking habits, the number of death will reached 1 billion at the end of this century, many of which will occur in low- and medium-income countries.

Raising the tax on cigarette (or tobacco) is considered to be a good approach. Many countries have conducted high tax on cigarettes and some of them have acquired considerable improvements. This paper will first introduce the current situation of cigarette consumption concerning the aspects of taxes, smoking, and its influences. Then it examines how high taxes help reduce smoking from economical prospects, taking into consideration the demand and supply mechanic, the price elasticity of demand, and difference among different groups. Following the economic explanation, this paper elaborate on three possible confusions of tax increasing. Finally, a conclusion will be given to summarize the main points of this paper.

Body

Current situation of cigarette consumption: taxes, smoking, and its influences

The health consequences of smoking and the following healthcare expenditure are main reasons why a nation would pursue a high tax or other demand decline policy. Unrealized by many people, smoking has already been killing one in ten adults in a global scale. Smokers are easily addicted to nicotine, one of the ingredients of cigarettes. Together with other toxic ingredients, nicotine absorbed from frequent smoking would result in lung cancers and other organic cancers, and smokers usually have a shorter life span comparing with nonsmokers. Moreover, smoking can have negative harmful influence on nonsmokers through the air, which would result in sub-health among a wider scope of population. Nevertheless, there are still many people, and people in many regions do not realize the exact harm of smoking and weigh the present pleasure from smoking more important than future risks.  Despite the fact that since smokers may live shorter lives, their healthcare costs on average are likely to outnumber that of nonsmokers.

 The number of smoker has been decline during the past several decades in higher income countries, but the number of low- and middle-income countries has still been increasing, and many of smokers take up their first cigarette as adolescents. Report suggests that, currently, the poor are more likely to smoke than the rich, and many of them start their first smoke in their early twenties. In some middle schools, young school boys raging from 10 to 19 year old also are potentially be attracted to smoke for they regard smoking as the representativeness of masculinity and social capacity. Notwithstanding that modern economy theory supposes people to be rational, knowing their preferences, consuming rationally according to budgets, and being able to weigh the benefits and costs of their behavior, people in real life very often are not driven by reason, especially when they are addicted to something or when they are too young. This is the reason why national governments need to implement tax increasing and related policy to help reduce the cigarette consumption.

How high taxes can help reduce smoking: An economical explanation

Considering the supply and demand mechanic of cigarette market, increasing tax rate on cigarette will higher the price of cigarettes. As consumers demand curve goes down when price increases, the new equilibrium will be reached at a lower cigarette volume (Figure 1. The variation of cigarette market). It is evident that when at new equilibrium (E2) the consumption of cigarette declined obviously due to the raising price. However, it is noteworthy that in this case the price elasticity of cigarette demand curve did not be taken into consideration. However, price elasticity of demand, difference between adolescents and adults, and difference between the poor and the rich also should be taken into consideration to analyze the effects of higher tax.

Price elasticity of demand in cigarette market has been researched by many researcher, it is an important index in evaluating the efficiency of higher tax policy in short-term. Although the are various estimations on price elasticity of demand, most researches found that the price elasticity of demand of cigarette is inelastic. Lewit and Coate (1982) reviewed the elasticity found by previous researchers since 1970, reported that the elasticity ranged from -0.40 to 1.30, while the income elasticity ranged from 0.08 to 0.93, both are inelastic. Wasserman et al. (1991) analyzed the price elasticity went down from 0.06 in 1970 to -0.23 in 1985, while 95% researches estimated the number ranged from -0.46 to 0.005 in 1985. Wasserman found that price changes have great effect on people’s decision, especially teenagers, on whether to become a smoker, rather than how many cigarettes a smoker consume. Hence, the high tax policy might not be so efficient as people are not so responsive to price change regarding cigarette consumption.

 Concerning the difference between the young and the adults, some researches also revealed that teenagers are more responsive to the change of cigarette price than adult and have higher price elasticity of demand (Harris, & Chen, 1999), partly due to they are not so addicted to the adults, partly due to they have so limited budgets. However, as it is wide recognized that the young smoke mostly because of peer pressure and their eager to acquire social acceptance, some of the young may not responsive to the price change but have particular preference to brand (DeCicca et al., 2002; Kenkel, & Mathios, 2000). Besides these different concerns, researches suggest that price reduction will discourage youths from smoking from both direct and indirect approaches (Hasselt et al, 2015; Carpenter, 2008; Krauth, 2005).

On the other hand, there are no consistent opinions on whether the poor have lower or higher price elastic of demand when compared with the rich.  Some researches suggest that the poor tend to have more price inelastic demand curve compared with the rich, which means the higher cigarette price may bring more burden for the poor smokers (Wasserman et al). While some other believes that the poor have more demand elastic than the rich, holding the opinion that high taxation would reduce the tax burden and improving the health outcome of the poor (Gruber, Sen, & Stabile, 2003).

Since the demand curve tends to be more elastic in the long run, observing long-term data is of significance.  Sajjad Ahmad (2002), by analyzing the long term effects of a 20 % price increase on cigarette in California in 1999 over 75 years, suggested that the tax induced price rising would have remarkable effects on reducing smoking prevalence, promoting overall health condition, and improving economic outcome. Specifically, this policy would reduce smoking rate from 17 % to 11.6 % and people will have longer life span, which accumulated to 14 million years over 75 years. Money spend on smoking would drop by $12.5 billion, and smoking-related healthcare cost would be  $188 billion less. To large extent, teenagers’ responsive to price change provide guarantees the long-term improvement of smoking prevalence.  Hasselt and his colleagues (2015) studied the influence of the tax increase on cigarette in 2009, by analyzing data from the 2002 - 2011 National Survey on Drug Use and Health, also found that the 2009 year’s tax raise has a substantial influence on smoking reduction among youth and young adults.

Possible Negative effects of high taxes on cigarette: why some governments hesitate?

Although few people would question the harm of smoking, many still do not sure whether s a government should pursue a high tax policy to restrain the selling volume of cigarette or not. Three basic confusions stand out of others, though they might not all consist with reality. For one, reducing the demand and supply of cigarette would increase thousands of unemployment. Secondly, lower quantity of cigarette trading also means much less government revenue. Finally, governments afraid that they would stimulate the black market trading, if conducted very strict restriction, and it is hard to anticipate whether a policy is too strict or not. Due to the policy hysteresis and that governments need to maintain their credibility, it is almost impossible for policymakers to react instantly according to the change of the market instantly.

From economic theory, consumption reduction, supposing the high tax policy does work, in cigarette would not lead to long-term large scale laid off, since previous smokers will spend their money in other substitute goods.  Namely, money saved by high taxes policy on cigarette will support the development of other industries, therefore, improving the unemployment result from the declining cigarette trading.

Furthermore, according to the Laffer Curve  (Figure 2. Laffer Curve), government revenue might even increase with a higher tax rate. Even though the total trading amount declined, since the tax rate hiked, government can acquire more revenue when tax rate raise from A to B. However, identifying the turning point is difficult in reality. In national wide, according to WHO report (2013), doubling the price of tobacco (cigarette) through tax increasing would raise another around $100 billion per year, outside the existing $300 billion tobacco revenues, estimated by the WHO governments.

 As for the final point, very strict restriction does will result in more black market trading or smuggling, which can be supported by the case of Volstead Act (Prohibition) during 1919 to 1933. It is very important for policymakers to set an appropriate high tax rate. Smuggling is inevitable for there are always speculators earn their profits by making use of price difference, but even with these smuggling, high tax on cigarette  (or tobacco) can drastically reduce the consumption of cigarettes.

Conclusion

The number of smokers has been increasing rapidly over the past decades, resulting massive potential costs of monetary and human resources. High taxes on cigarettes are good approaches to reduce the consumption of cigarettes. Given that cigarette market obeys the rule of demand and supply, the taxation will increase the price of cigarettes, hence, theoretically the consumption of cigarette will decrease dramatically when reaching the new equilibrium. However, the problem is much more complex in reality, considering the inelasticity of smokers demand curve, there would be limited improvement in short-term. Nevertheless, in the long run, there are more elasticity of their demand curves and smokers can be discouraged by this policy.

51due留学教育原创版权郑重声明:原创优秀代写范文源自编辑创作,未经官方许可,网站谢绝转载。对于侵权行为,未经同意的情况下,51Due有权追究法律责任。主要业务有essay代写assignment代写paper代写作业代写、论文代写服务。

51due为留学生提供最好的论文代写服务,亲们可以进入主页了解和获取更多代写范文提供论文代写服务,详情可以咨询我们的客服QQ:800020041。

上一篇:A Discussion of Authorial Styl 下一篇:Clayoquot Wilderness Resort Pr