1. The state excise tax on cigarettes in Missouri is $0.17 per pack (by far the lowest in the nation). In November 2016, citizens of Missouri voted on a ballot proposal to increase the excise tax on cigarettes by $0.60 per pack, to $0.77 cents per pack. As required by law, the state auditor issued a fiscal impact statement for this proposal; here is an excerpt from that report:

Use this information to estimate the increase in tax revenues from the proposed increase in the excise tax.

HINT #1: The auditor was sloppy in describing the elasticity for cigarettes; assume this means a price elasticity of -0.8.

HINT #2: You will need to assume that you are working with the long run supply curve (why?)

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Sixta KovacekLv2

25 Jan 2019

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1. Discuss some of the policy players (groups) that have been involved in the tobacco debate, their values, and their efforts to sway elected officials.

A. What role have the courts played in tobacco policy?

B. What are some of the long-term effects of the policy change regarding tobacco? (cigarette taxes - How High Are Cigarette Taxes in Your State? June 3, 2015 Scott Drenkard For this weekâs tax map, we take a look at cigarette tax rates across the country, which vary widely from state to state and are levied on top of a federal rate of $1.0066 per 20-pack of cigarettes. (Click on the map to enlarge it. Reposting policy) Cigarettes are taxed the highest in New York, at $4.35 per pack. New England states round out the remaining top four, with Massachusetts charging $3.51 per pack, followed by Rhode Island ($3.50) and Connecticut ($3.40). On the other end of the spectrum, Missouri levies the lowest tax on cigarettes at 17 cents per pack â trailed closely by Virginia ($0.30), Louisiana ($0.36), and Georgia ($0.37). Not shown here are local cigarette taxes, which can be substantial. In Chicago, Illinois, the combined state, county, and municipal taxes total to $6.16, while in New York City, smokers pay $5.85 per pack. States didnât start taxing tobacco until the 1920s, but by 1969, each state and the District of Columbia had followed suit. Although cigarettes are already one of the most heavily taxed consumer goods in the U.S., many states continue to target smokers with increased rates. Many states use collections from tobacco taxes to fund their public school systems, which we have pointed out could cause budgetary problems as cigarette tax revenues are on the decline as less and less people smoke. Moreover, evidence shows that wide differentials in cigarette taxes across states have opened up a black market for smuggling, with criminals obtaining cigarettes in low-tax states and selling them in high-tax states. Finally, taxes on cigarettes disproportionately affect low-income residents. Read more about cigarette taxes here. Follow Scott on Twitter..)

C. As one policy is implemented, often alternatives arise. As tobacco use has declined, what are new policy concerns about e-cigarettes and what actions have been taken?

As the U.S. Surgeon General warns on each pack of cigarettes, smoking can be hazardous to your health. Researchers estimate that smoking kills 440,000 Americans a year10 times the fatalities from traffic accidents. Smoking is the overwhelming cause of lung cancer, which is the top cancer killer among women. Four of five people with lung cancer die within three years. Smoking is also the leading cause of heart disease, emphysema, and stroke.

Thus, smoking imposes major health and economic costs. Policymakers try to reduce these costs by discouraging smoking, especially among young people. About one in four U.S. high school students were smokers in 2005, the same rate as in 2003. Each day, about 3,000 U.S. teens under 18 become regular smokers. Worldwide, an estimated 100,000 teens become regular smokers each day.

One way to reduce youth smoking is to prohibit the sale of cigarettes to minors. A second way is to raise the price through higher cigarette taxes. The amount by which a given price hike reduces teen smoking depends on the price elasticity of demand. This elasticity is higher for teens than for adults. Why are teenagers more sensitive to price changes than adults?

First, recall that one factor affecting elasticity is the importance of the item in the consumer's budget. Because teen income is relatively low, the share spent on cigarettes usually exceeds the share spent by adult smokers.

Second, peer pressure shapes a young person's decision to smoke more than an adult's decision to continue smoking (if anything, adults face negative peer pressure for smoking). Thus, the effect of a higher price gets magnified among young smokers because that higher price also reduces smoking by peers. With fewer peers smoking, teens face less pressure to smoke.

And, third, young people not yet addicted to nicotine are more sensitive to price increases than are adult smokers, who are more likely to be already hooked.

The experience from other countries supports the effectiveness of higher cigarette taxes in reducing teen smoking. For example, a large tax increase on cigarettes in Canada cut youth smoking by two-thirds. Another way to reduce smoking is to change consumer tastes through health warnings on packages. In Canada, these warnings include photos showing how smoking can affect the brain, teeth, and gums, and a wilted cigarette depicts male impotence.

In Australia, labels show gangrenous limbs, underweight babies, cancerous mouths, and blind eyes. Belgium adds corpses to the picture.

In California, a combination of higher cigarette taxes and an ambitious awareness program contributed to a 5 per cent decline in lung cancer among women, even as it rose 13 per cent in the rest of the country. (As of 2007, state taxes varied from a low of 7 cents per pack in South Carolina to a high of $2.58 in New Jersey.)

More generally, the message about the dangers of smoking along with the higher cost of cigarettes has affected over time. Only about 20 per cent of American adults now smoke, down from more than half in the 1960s.

According to the U.S. Centers for Disease Control and Prevention, each pack of cigarettes sold in the United States costs society $7.18 in higher health care costs and lost worker productivity. The added cost exceeds $150 billion a year, which works out to be about $3,400 per smoker per year.

What is the best way to prevent and reduce smoking? Briefly discuss.

limelizard543

What is the best way to prevent and reduce smoking? Briefly discuss.

Please read the article below to have a general idea about the topic.

Case Study: Deterring Young Smokers

As the U.S. Surgeon General warns on each pack of cigarettes, smoking can be hazardous to your health. Researchers estimate that smoking kills 440,000 Americans a year, 10 times the fatalities from traffic accidents. Smoking is the overwhelming cause of lung cancer, which is the top cancer killer among women. Four of five people with lung cancer die within three years. Smoking is also the leading cause of heart disease, emphysema, and stroke.

And, third, young people not yet addicted to nicotine are more sensitive to price increases than are adult smokers, who are more likely to be already hooked.

In Australia, labels show gangrenous limbs, underweight babies, cancerous mouths, and blind eyes. Belgium adds corpses to the picture.

In California, a combination of higher cigarette taxes and an ambitious awareness program contributed to a 5 percent decline in lung cancer among women, even as it rose 13 percent in the rest of the country. (As of 2007, state taxes varied from a low of 7 cents per pack in South Carolina to a high of $2.58 in New Jersey.)

More generally, the message about the dangers of smoking along with the higher cost of cigarettes has had an effect over time. Only about 20 percent of American adults now smoke, down from more than half in the 1960s.

According to the U.S. Centers for Disease Control and Prevention, each pack of cigarettes sold in the United States costs society $7.18 in higher health care costs and in lost worker productivity. The added cost exceeds $150 billion a year, which works out to be about $3,400 per smoker per year.

SOURCES

Hutchinson, Smoke Signals: Adolescent Smoking and School Continuation, NBER Working Paper 12462, (August 2006); and Hana Ross and Frank Chaloupka, The Effects of Public Policies and Prices on Youth Smoking, : John Tauras, An Empirical Analysis of Adult Cigarette Demand, Eastern Economic Journal, Vol. 31, No. 3 (Summer 2005): pp. 361375