Cigarettes should be more expensive

Introduction

In developed countries, cigarette smoking is the leading cause of illnesses such as lung diseases, cancer, vascular pathologies, heart disease and more. The diseases are causing a high rate of death in both adults and teenagers. Smoking causes serious harms to the body and the immediate health effects leads to negative health consequences. The important thing to note is that quitting smoking reduces the smoking-related diseases and people prolongs their days of living.  Cigarette smoking is an issue of concern as it is affecting health and economy.  A study done in U.S in years 2015 reported that in annually basis, the estimated economic cost of cigarette is more that %300 billion. Out of the amount, $170billion is spent for health care costs and %156billion is spent in dealing with premature death and secondhand smoke. Generally, in every year, about 480,000 young American people die as a result of cigarette smoking and 42,000 out of the total number die as a result of secondhand smoke.  This is an issue which requires a great concern and implementation of policies in order to reduce deaths, save lives and money.  In combating the issue of cigarette smoking, Cigarettes should be more expensive, increase sales tax and cigarettes tax in order to reduce the buyers.

Clift (2004) asserts that in worldwide, 1.1billion people are cigarette smokers and a study on cigarette smoking show that by 2025, the number will increase by 1.6 billion. In developed countries, the total number of people who smoke cigarettes has been declined while the number has been rising up in developing countries.  In both developing and developed countries, smoking has caused two major health effects. First, the fact is that cigarette contains poisonous compound knows as nicotine and many smokers becomes addicted to the nicotine which acts a stimulant.  Secondly, smoking causes fatal illnesses such as cancer, respiratory disease among others (Clift, 2004). The addiction and smoking affects the nonsmokers such as infants and this is an additional risk and high rates of deaths to adults and children.  The author asserts that the risk increases the cost of smoking. However, many smokers from developing countries do not put concern on the risk associated with smoking. They believe that smoking has no effect on their health. In developed countries, smokers are unable to make sound judgment on the actions and so they end up spending large amount of money in buying cigarettes. In trying to reduce the purchasing power as well as illnesses associated with cigarettes, there is evidence from countries with high and low income levels that the only effective way of reducing cigarettes demand is raising the sales of cigarettes (Clift, 2004).  Higher taxes make large number of smokers to stop smoking and also reduce the number of people who plans to engage in smoking behaviors.  For example, a modeling assumption assert that if the one pack of cigarette is raised by 10%, the demand will go down by 4% in developed countries and 8% in developing countries (Clift, 2004).  In addition, the rise of tax by 10% will make about 40 million people to stop smoking and this means that about 1million people will save their lives from cigarette related illnesses.   Since this is just   a modeling assumptions, the amount of tax to be imposed on cigarettes should be estimated by evaluating the per capita incomes from empirical data and consider societal values (Clift, 2004).  

Other important point to note is that increasing cigarettes sales will reduce the demand and this indicates that tobacco growers will be affected as a result of domestic sales decline.  The reduction of tobacco domestic sales will also decrease tobacco revenue and increase the economic benefits. Given that tobacco growers will be adversely affected, it means that the farmers will find other alternatives   in order to get income and sustain their families (Redhead & Burrows). In others words, there will be crop substitution and cultivate other products which has limited restriction from the government taxation.  The point is that price strategy is an effective method of ensuring g that the demand of cigarette is reduced as smokers cannot afford the higher amount in purchasing.  Price elasticity should be put in tobacco industry with an aim of changing the price and decision behaviors. In increasing tax, the FDA should be in the frontline to ensure economic welfare in the production of cigarettes. FDA has the role of controlling the manufacturing as well as the marketing of products such as tobacco (Redhead & Burrows).  In manufacturing, FDA is responsible in implementing rules and regulations in ensuring that harmful products which affect the public are not manufactured. In marketing, FDA has the role to ensure that manufactures use labels and warnings to show that tobacco ruins the health.  Given that they have roles and responsibiility of regulating tobacco products, FDA should use the pricing strategy and this is an effective way of reducing the demand of cigarette consumption (Redhead & Burrows).  FDA should impose a high tax on output   so that the industries can get less amount of revenue. They can do so by regulating advertising and manufacturers’ user fees.  If the firms are given restrictions on advertising, firms will reduce illegal sales (Redhead & Burrows). The firms will also spend a large amount of money in complying with new regulations. They will have to impose users’ fees and increase prices of tobacco   and the higher prices will affect the purchasing power of buyers. The consumption will be reduced among adults and teenagers as they will not afford the higher amount (Redhead & Burrows).

Kaestner & Callison (2014), assert that raising cigarette tax will have a positive impact on economy and people’s health in that an increase in price will reduce the rate of consumption.  The article show that if the cigarette tax is increased by 1%, the rate of consumption will go down by 0.3 to 0.7 %. The overall reduction will be related with reduction of current smokers and reduction in number of cigarettes.  The higher imposition will not only reduce the cost of health care but also it will save lives (Kaestner & Callison, 2014).   Marr and Huang in their article assert that higher taxes will decrease tobacco revenues, increase government revenue and at the same time improve the health. Tobacco taxes are an effective method of controlling the rate of consumption.  A reduction in rates of smoking will reduce the higher rates of death in that low-income smokers will improve their health through regressing from tobacco taxes. The article asserts that by imposing tax, the government will increase revenue and the higher revenue will be used to provide low-income children will education. This means that reduction in smoking will improve the economy through educating people and spending revenue in other meaningful activities (Marr & Huang 2014). The article assert that according to 100international studies, tobacco taxes play a significant role of  controlling tobacco consumption  thereby  extending lives  and  maintaining  peoples’ health.  From the article, the president proposed that the cigarette tax per pack   in 2015 should be raised from $1.01 to $195.  The empirical data show that in 2012, $1 per pack will decrease the number of smokers aged 18-24 by 8%.  In addition, only 4% smokers will die as a result of smoking-related diseases (Marr & Huang 2014).  In 2021, out the total number of smoker in world, only 2.6million aged 18years will be smokers if only the tax is raised by $1-per pack.  The overall outcome will lead to productive lives and a floursing economy.  Other important point to note is that an increase in tax will decrease the cigarette revenue since many smokers will quit.  Only few smokers will afford money to purchase cigarette and the tax paid will benefit the government in meeting the national needs and creating a strong future economy (Marr & Huang 2014).

 

According to World Health Organization, the most effective policy of tobacco smoking is raising taxes. The article asserts that the price of tobacco should be increase so that it can be sold at a higher cost and make it less affordable (World Health Organization, 2014).  According to WHO, raising tobacco price by 10%, high-income countries will reduce the consumption by 4% and low income countries will reduce by 5%.  Price increase will not only reduce consumption but it will also lead to health benefits particularly on young people.  A study on tax increase in 2010 reported that   a price increase by 10% would eliminate the tobacco consumption by 18%.  Given that tobacco is the leading cause of death among teenagers and adults in U.S, an increase in price will also be a cost-effective method in health cost and preventive measures by the government (World Health Organization, 2014).  In addition, an increase in price will reduce the affordability thereby reducing the consumption rate and eliminate diseases as well as death.  According to WHO 2012 data, the rate of consumption of tobacco can be reduced by 49% and the rate of death can be reduced by 11million if only countries can increase the tax of cigarettes per pack by 50%.  This means that tax imposition will result to half reduction of smokers and half reduction of tobacco usage (World Health Organization, 2014).

 

On the governmental side, raising sales tax will brings benefits to the government through an increase in revenue.  Excise taxes will help the government to meet its health objectives through raising prices (Marr & Huang 2014).  Tobacco industries will find it difficult to manage the higher amount of tax imposed on the goods and service.  For government to ensure that it does not lose the revenue, it should stabilize the tax rate of cigarette and other tobacco products.  This is important because   smokers may quit and shift to other tobacco products.  Other point is that the government can also use other option of increasing tax revenue by implementing cost-effective measures of cigarette smuggling.  Measures such as enforcement efforts, strict laws, high-tech tax stamps and more will reduce the sales of tobacco as well as consumption rate (Marr & Huang 2014).  An increase in tax and increase in government revenue will have a positive impact on the federal budget in that the government health care programs such as Medicare, Health Benefit Programs, health insurance and other programs will be conducted effectively (Marr & Huang 2014).

 

Conclusion

Tax increase on sales tax and cigarettes tax is an effective method of reducing cigarettes smokers, reducing smoking-relating diseases, death, maintaining health and increasing government revenues.  On the users’ side, price increase will affect their purchasing power. For the most part, the middle-class smokers will not afford the higher amount of money to purchase the produce. On the same note, the product will be unaffordable since the wholesalers and retailers will not afford the product to bring to the end user.  This is an effective way of reducing deaths and illnesses. The government will also increase the revenue and utilize it to meet the national needs.  Though tobacco farmers will be adversely affected, the few people who will produce will pay high tax which the government will use to develop the economy.

 

 

 

 

 

Reference

World Health Organization (2014). Raising Tax On Tobacco. What you need to Know.

Retrieved from: http://apps.who.int/iris/bitstream/10665/112841/1/WHO_NMH_PND_14.2_eng.pdf

 

Marr Chuck & Huang Chye-Ching (2014). Higher Tobacco Taxes Can Improve Health And Raise Revenue.

Center on Budget and Policy Priorities

Retrieved  from:  http://www.cbpp.org/sites/default/files/atoms/files/6-19-13tax.pdf

 

 

In Clift, J., & International Monetary Fund,. (2004). Health and development: A compilation of articles

from Finance & development. Washington, D.C: International Monetary Fund.

 

CALLISON, K., & KAESTNER, R. (2014). CIGARETTE TAXES AND SMOKING. Regulation, 37(4), 42-46.

 

Redhead, C. S., Burrows, V. K., & Library of Congress. (2009). FDA tobacco regulation: The Family

Smoking Prevention and Tobacco Control Act of 2009. Washington, D.C: Congressional

Information Service, Library of Congress.