Analysis On Taxes On Cigarettes

Report analysis on taxes applied on cigarettes

In one of the article of Baltimore Sun that entitled “Time for the feds to raise the cigarette tax”, it informs us about the government activity on the taxation of cigarettes and how it benefits Maryland by saving lives of smokers, as it’s stated that more than 70,000 lives has been saved due to the lower smoking rates. Maryland has collected revenue of nearly $400 million from tobacco and alcohol. Between the period of 1998 and 2009 there has been a decline in adult smoking rates by 32.6 percent. The congressional budget office have come into conclusion that hike in the tax of cigarettes from $1.01 to $1.51 per pack would help trim costs to Medicare, also there would be a decline in death rates and improve health, this would therefore make the citizens of the US live longer and paying taxes longer. It’s a possibility that tobacco companies are to make a riot, by making statements such as tax revenue is not the dependable source of revenue, and increasing tax will only inspire smuggling. If poor people are the ones who’ll quit the habit of smoking, so much better for them as they’ll benefit a better quality of life, but there will be a raise in the cost of Social security as there are healthier individuals who are likely to live longer, and hat would result in more retirees.

This article can be analyzed in an economical point of view and who it’ll effect, whether the buyer or seller, and the incidence of tax, in which who will bear the tax.
With New York being the highest taxpayers, paying $4.35 per pack (Tax.ny.gov, 2014), the main intention of any state that applies taxes on cigarettes is to cut down the quantity being sold. Now why is this important? According to CDC (Centers...

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...muggling, to avoid this government needs to have an official seal on all of their cigarettes sold in their state. It’s estimated that 20.2 percent of the cigarettes consumed in the state Maryland are smuggled (Tax foundation, 2014). However, it would reduce the consumption of people with low incomes, or they would reduce consumption in other areas to compensate for the price they’re paying. There’s not always positive effect on the taxation of tobacco, this effect could also result in illegal dealing in the state of Maryland, crime rates might raise and so does selling illegal cigarettes. As stated there has been a decrease in the death rates, and also declining youth smoking rates, as they can’t afford to buy them.