Impact of Tobacco Tax Increases

This assignment examines the effects of raising taxes on tobacco products. It analyzes how increased prices influence consumer behavior, government revenue generation, and environmental protection by reducing pollution from smoking. The document evaluates policy solutions aimed at reducing tobacco retailer density and explores the effectiveness of tax increases in curbing smoking rates. It draws upon research findings and expert opinions to provide a comprehensive understanding of this complex issue.

ECONOMICS INTERNAL
ASSESSMENT

Table of Contents
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ARTICLE ........................................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
ARTICLE
The cabinet at the meeting decides to make it mandatory for all the shops selling tobacco
products, cigarettes and bi dis to have a license with them otherwise legal cation will be taken.
Keeping in view about the high smoking prevalence and the high purchase of the loose cigarettes
in the state of Himachal Pradesh a new law named is launched that is Himachal pradesh
prohibition of sale of loose cigarettes and Biddies and also the regulation of retail businesses of
cigarettes including their tobacco products(Ackerman and et.al.,2017).
The act is bee enacted in 2016.new law provides the strict provision for banning sale of
loose tobacco products and license to the vendors of the tobacco. License for selling the tobacco
products will be given to only those who are existing all the regulation and rules. Regulation of
licensing of the tobacco products made more effective(Henriksen, 2015). It is appropriate to
develop a mechanism to provide permission and authorisation through the municipal authority to
the retail shops who are selling the tobacco ad tobacco related products according to the Ministry
of health and family welfare said.
About 200 sellers or retailers of tobacco and cigarettes protested in month after the chief
minister has asked about to draft the legislation for registration of the tobacco products to health
department. Vendors also argued that registration will increase the corruption among government
functionaries and will also affect the livelihood.
Ministry desiring the licenses for the sale of tobacco products through authorised vendors
only. Some shopkeeper purposefully store the non tobacco products at shops so that children
start consuming the tobacco products at an early stage so that they can increase their sale ad earn
profit. Selling of the tobacco products through licenses shop will lead to prevent mushrooming of
outlets selling tobacco products and also shrewd marketing of tobacco products to the kids.
GYTS survey also founded that in the year 2009 nearly around 15%of children in which
9% of boys and 6 % of girls in India who were under the age of 13-15 used some form of
tobacco products(Luke and et.al.,2017). Another 15.5% of children belonging to the same age
group who never smoked likely to smoke in the following year. Overall tobacco among students
aged between the range of 13-15 increased from 13.7% in 2006 to 14.6% in year of
2009.Tobacco industry targeting the youth and children for their new customer base so they can
increase their sale as and can earn good amount of profit. National survey of household living

conditions has estimated and ideal demand system to greater the price elasticities for the demand
of the tobacco(McDaniel, Smith and Malone, 2016).
Using elasticities for expected smuggling, it can be simulate that consumption and tax revenue
effect the change of the price of tobacco under various available tax schemes.
Increasing taxes on tobacco products to double the price of the imported cigarettes by
90%.young adults aged between the 15-30 re more sensitive, consumption leads to drop by 9 %
for imported cigarettes and by 100% for domestic cigarettes. Government revenue will result in
increase by approximately by 52%(Luke and et.al.,2017).

Evaluation
Estimated elasticities clearly indicates that increase in the taxes on all the tobacco related
products including cig-grates etc. will lead to reduction in the consumption of the tobacco
products and will lead to increase in the revenue of the given market. Effectiveness of the
increases' taxation may help initial national debate on the need of raising the taxes on tobacco
products.
There is consensus among the policymakers that raising tobacco taxes will reduce the
cigarette consumption as evidence that tobacco taxes will reduce the adult smoking which
implies that 10 percent increase in the cigarette price will lead to 4 percent reduction in cigarette
demand of adults(Ackerman and et.al.,2017).
Cigarette taxes increase my have small negative association with the consumption of
cigarette. Also, it is difficult to distinguish between the effect from the 0. It implies that very
largely taxes increases on other order of 100 percent so that it helps in reducing the smoking by
at most of 2- 3 percent. In addition to this increasing taxes on tobacco and cigarette products will
lead in prevention of the environment also as smoking causes pollution which causing severe
damage to the environment and nature(Henriksen, 2015).
It can be conclude that increased price of the tobacco products through charging higher taxed
will lead to lesser consumption of the tobacco products which ultimately benefit the government
by increasing their revenue and the environment by protecting it against the pollution caused by
smoking etc.

REFERENCES
Ackerman, A and et.al.,2017. Reducing the density and number of tobacco retailers: policy
solutions and legal issues. Nicotine & Tobacco Research. 19(2). pp.133-140.
Henriksen, L., 2015. The retail environment for tobacco: a barometer of progress towards the
endgame.
Luke, D. A and et.al.,2017. Tobacco town: computational modeling of policy options to reduce
tobacco retailer density. American journal of public health. 107(5). pp.740-746.
McDaniel, P.A., Smith, E. A. and Malone, R. E., 2016. The tobacco endgame: a qualitative
review and synthesis. Tobacco control.25(5). pp.594-604.