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Reasons for Government Taxation of Cigarettes

Question

Explain why governments tax cigarettes.

Category:

Taxes and subsidies

Preview Answer

STEPS TO WRITE ESSAY 💡MAIN POINTS💡OVERVIEW

I. Introduction
A. Background information on cigarette taxation
B. Thesis statement

II. Reason 1: To raise revenue
A. Explanation of price-inelastic demand for cigarettes
B. Discussion of addictive nature of smoking
C. Examples of government spending funded by cigarette taxes

III. Reason 2: To discourage consumption
A. Explanation of demerit goods
B. Discussion of health problems caused by smoking
C. Examples of government anti-smoking campaigns

IV. Reason 3: To reduce external costs
A. Explanation of external costs created by cigarettes
B. Discussion of pollution and health problems for non-smokers
C. Examples of government policies to address external costs

V. Other reasons for cigarette taxation
A. Improving the current account position
B. Discussion of cigarette imports
C. Examples of government policies to address imports

VI. Conclusion
A. Recap of reasons for cigarette taxation
B. Final thoughts on the effectiveness of cigarette taxation.

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