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	<title>Harry Clarke &#187; cigarettes</title>
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	<link>http://www.harryrclarke.com</link>
	<description>On economics, politics &#38; other things</description>
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		<title>Taxes to reduce incentives to sell cigarettes to youth?</title>
		<link>http://www.harryrclarke.com/2009/07/07/taxes-to-reduce-incentives-to-sell-cigattes-to-youth/</link>
		<comments>http://www.harryrclarke.com/2009/07/07/taxes-to-reduce-incentives-to-sell-cigattes-to-youth/#comments</comments>
		<pubDate>Tue, 07 Jul 2009 09:58:14 +0000</pubDate>
		<dc:creator>hc</dc:creator>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[cigarettes]]></category>

		<guid isPermaLink="false">http://www.harryrclarke.com/?p=453</guid>
		<description><![CDATA[<p>Michael Adams in The Economist&#8217;s Voice argues that tobacco companies should be taxed additionally to recoup the statistically-estimated costs of smoking by minors (subscription required). This would mean that cigarette producers would have no incentives to promote their products to young people and since most people start smoking at age 18 or less (the average age [...]]]></description>
			<content:encoded><![CDATA[<p>Michael Adams in <em>The Economist&#8217;s Voice</em> argues that tobacco companies should be taxed additionally to recoup the <a href="http://www.bepress.com/cgi/viewcontent.cgi?context=ev&amp;article=1525&amp;date=&amp;mt=MTI0NjkzMTE0NQ==&amp;access_ok_form=Continue">statistically-estimated costs of smoking by minors</a> (subscription required). This would mean that cigarette producers would have no incentives to promote their products to young people and since most people start smoking at age 18 or less (the average age in Australia is 15.9 years) this would substantially reduce smoking.<span id="more-453"></span></p>
<p>I wonder if this is a sensible suggestion. In most developed countries there is no opportunity to market to minors since advertising of cigarettes is banned or should be.  In most countries also sale of cigarettes to minors is prohibited with hefty potential fines.  In Australia a substantial level of cigarette sales to minors still does occur which suggests that penalties and enforcement are not up to scratch.</p>
<p>Moreover the only effects here are supply effects when one really needs to deal with demand by young potential smokers.</p>
<p><strong>Over the years I have made a number of proposals to eliminate smoking within a generation by confining smoking to those already addicted. </strong></p>
<p>My suggestion is to register cigarette users as nicotine addicts and to make cigarettes legally available only on the basis of a GPs prescription that <a href="http://www.cotinine.com/">would require a cotinine test</a>. To reduce the outrage that smokers might register at this suggestion the current excise on cigarettes should be held fixed for a few years. Then it would again increase.</p>
<p>Supplying cigarettes to those not authorised to smoke should be considered in the courts as supplying a dangerous drug and hefty fines should be imposed.</p>
<p>Current cigarette bans should be intensified to exclude all smoking that has <em>any</em> impact at all on non-smokers.  Smoking in all buildings and in cars with children is now banned in most states.</p>
<p>Duty free cigarettes should not be admitted into Australia and visitors who smoke should be able to bring only a few packets of cigarettes with them and perhaps a permit to purchase cigarettes for up to a two-week period from pharmacies.</p>
<p>Migrant applicants who reveal, through cotinine tests, that they are smokers should not be considered for entry to Australia. We can achieve a less socially-costless migrant intake by excluding smokers.</p>
<p>Of course the anti-smoking message should be pursued by the media and subsidised health and quit campaigns – particularly directed to indigenous Australians – should continue to be part of the policy mix. Firms should be encouraged to help smoking employees quit the habit and health insurance companies should charge a substantial premium to ensuring smokers.</p>
<p>That package of policies should get rid of smoking in one generation.</p>
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		<title>Smoking economics in the WSJ</title>
		<link>http://www.harryrclarke.com/2009/04/01/wrong-economics-in-the-wsj/</link>
		<comments>http://www.harryrclarke.com/2009/04/01/wrong-economics-in-the-wsj/#comments</comments>
		<pubDate>Wed, 01 Apr 2009 10:40:31 +0000</pubDate>
		<dc:creator>hc</dc:creator>
				<category><![CDATA[licit drugs]]></category>
		<category><![CDATA[cigarettes]]></category>

		<guid isPermaLink="false">http://www.harryrclarke.com/?p=60</guid>
		<description><![CDATA[<p>This Op-Ed writer in The WSJ - Brad Schiller &#8211; asserts that Obama&#8217;s &#8217;trebling&#8217; of excises on cigarettes from 39 cents to $1-01 (it is not a &#8216;trebling&#8217;!) will reduce the tax revenues accruing to US states collecting the tax given an elasticity of demand for cigarettes of -0.8.  That is a true statement &#8211; state tax [...]]]></description>
			<content:encoded><![CDATA[<p>This <a href="http://online.wsj.com/article/SB123854056373275583.html#mod=djemEditorialPage">Op-Ed writer in <em>The</em> <em>WSJ</em> </a>- Brad Schiller &#8211; asserts that Obama&#8217;s &#8217;trebling&#8217; of excises on cigarettes from 39 cents to $1-01 (it is not a &#8216;trebling&#8217;!) will reduce the tax revenues accruing to US states collecting the tax given an elasticity of demand for cigarettes of -0.8.  That is a <strong>true</strong> statement &#8211; state tax receipts will decrease &#8211; if state taxes are held constant with the increase &#8211; though Federal tax collections will <strong>increase</strong>.  </p>
<p>Federal taxes will increase because if demands remain inelastic increased taxes will increase the revenues on units that continue to be sold more than revenues will be lost because fewer units will be purchased.  When demand is inelastic purchases don&#8217;t fall a lot when prices rise.</p>
<p>The rest of the article doesn&#8217;t impress. The increased tax, it is claimed, should be rejected because it falls on the &#8216;poor&#8217;.  But it is foolish to consider the impacts of individual taxes on the welfare of the poor without considering the overall tax-transfer incidence.  Poor people might lose from this tax but gain from the overall tax-transfer system.</p>
<p>Moreover, the poor gain in terms of being less likely to die from lung cancer and heart disease.  Since the rich pay the tax they contribute tax revenue which can compensate the poor for any welfare losses they incur from not being able to kill themselves by smoking cigarettes.  I wouldn&#8217;t worry much at all about adverse distributional implications.</p>
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