SCHOOL
A study of how a tax revenue levy on cig arettes affects tobacco
consumption
Microeconomics Theory
1
INTRODUCTION
Tobacco consumption is matchless of the near pro? remit industry in the world. Taxes levied on
cigarettes and all some other tobacco goods usually represent more than the half of the bell of
the real selling price. These taxes produce an annual income for g bothwherenments higher than
two hundred billion US Dollars1.
It is medically proven that smoking is one of the ?rst causes for lung cancer and
respiratory diseases.
Taxes levied on tobacco are meant to be an ef?cient way to reduce the consumption of
cigarettes.
LITERATURE REVIEW
Statistics show that thither are more than 1 billion of smokers all over the world. They
smoke about 6 thousand billion cigarettes every year. Every smokers smoke on the
average of 1,600 cigarettes every year.
In the next few years at that place will be a decrease in tobacco consumption completely in Western/
developed countries.
On the other hand, there will be a remarkable increase for the ingest of cigarettes and
tobacco goods in the Third World countries and developing countries. The increase for
the demand of tobacco goods will set up a market with huge benei?ts for Worldwide
tobacco transnational companies.
Tobacco multinational companies have been looking at these countries as pro?table new
markets , where taxation system in tobacco sector is preferably weak and where people are not
as much assured of the consequences of the use of tobacco as much people are in the
West countries.
Advertisement for tobacco is particularly potent in developing and Third World countries; It
has a plentiful role in increasing the demand for cigarettes2.
1
hypertext transfer protocol://www.pmi.com/ita/tobacco_regulation/tobacco_taxation/pages/tobacco_taxation.aspx
2
http://www.smettere-di-fumare.it/numeri-del-fumo.shtml
2
The WHO (World Health Organization) argues that taxes on tobacco consumption are an
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