To What Extent Are Taxes on Cigarettes Effective and How Does the Impact of These Taxes Affect Across Income Groups?

In this project, it will analyze the effectiveness of cigarette taxes and their impact on consumers of different income levels. The nature of cigarettes and the factors that determine the effectiveness of cigarette taxes will be considered, as well as the risks that cigarettes and cigarette taxes will bring. In particular, it will explore how consumers of lower and higher income, are impacted differently. In academic literature there is significant debate over the effectiveness or cigarette taxes. This paper will contribute to this debate by considering the impact of cigarette taxes on smokers of different income level from their perspectives. In this study, my goal is to demonstrate the effectiveness of cigarette taxes varies across income groups. Specifically, this paper will investigate the economic rationale for cigarette taxes, how the impact of these taxes varies across income groups, and the causes of this variation in effectiveness. The rest for this paper will be organized as follows. The introduction will present the background and importance related to this paper. The literature review will survey the current debate on cigarette tax effectiveness and will summarize the evidence. The discussion section will: explain why cigarettes need to be taxed, study the price elasticity of cigarettes and how this determines the impact of the tax on smoking level, and discuss how high- income and low-income groups are affected by cigarette taxes, differently. The conclusion will summarize the research findings and outline areas for future work.