|
Reprinted from Tobacco Control in Developing Countries, edited by Prabhat Jha and Frank Chaloupka, "The taxation of tobacco products," 235-272, 2000, with permission from Oxford University Press. ABSTRACT Shortly after Columbus returned to Europe bringing tobacco from the New World with him, tobacco use was subject to much controversy. Indeed, a number of countries soon adopted laws prohibiting the sale of tobacco and/or its public use, while others described tobacco as a "social menace". However, it wasn't long before these laws were repealed as treasuries realized that significant revenues could be generated from the sale and taxation of tobacco and tobacco products. For centuries, nearly every country in the world has taxed tobacco and/or tobacco products, largely because the relatively inelastic demands for these products make them an easy source of revenues. Over time, however, as the health consequences of cigarette smoking and other tobacco use were discovered, increased taxation of these products has been used by at least some governments as a way of reducing the public health damage caused by tobacco. This chapter reviews a variety of issues related to the taxation of cigarettes and other tobacco products, beginning with a description of alternative approaches to tobacco taxation. This is followed by a review of the economics literature on the impact of tobacco taxation on price and the subsequent effects of prices on the demands for cigarettes and other tobacco products. Finally, the various rationales for tobacco taxation, including those related to revenue generation, equity, and as a means to improve public health, are considered. Chapter
10
(PDF 1.76MB)
|