Bigger Tobacco Taxes Do Not Stop Smokers from Lighting Up

Published on March 17th, 2014 00:00
Lighting Up

It shouldn't amaze anybody that increasing taxes on tobacco products results in an even bigger underground market for smoking products. It is just economics. However, a completely new research conducted by the Canadian Taxpayers Federation and U.S. based Reason Foundation affirms the following: when taxes increase, cigarette seizures rise. What is actually exciting about this research, however, is the degree of the cause and result relationship.

For instance, in 1994, Canada’s authorities reduced excise tax rates on tobacco products in half, and numerous regions, including Ontario, adopted the suit but already with their own cutbacks. Ontario’s tobacco tax dropped about 66 % and Quebec’s were reduced by almost 71 %. This was carried out in an attempt to overcome the prevalent cigarette smuggling across the U.S. border. Because of increasing pressure from interested parts and lobbyists, Canada’s authorities boosted cigarette taxes in 2001 and already by 2002 they constituted the 1994 levels.

The research was carried out right after the U.S. President Barack Obama's suggestion about increasing tobacco taxes in that country as a means to finance public earlier education programs. However as outlined by the CTF's Candice Malcolm, Obama has to take a look at what is going on in Canada before he goes on. "In Ontario, the government sacrifices more than a billion dollars yearly because of untaxed tobacco," Malcolm added at the press conference. "We just have to look at our own history in order to see that we are doing the old one mistake once again and come across a possible alternative with Jean Chretien’s 1994 tobacco tax guidelines."

The research also creates the dubious declaration that increasing cigarette taxes possesses little or no effect on consumption rates. "There was hardly any proof that the middle 1990’s reduced tax rates motivated more cigarette consumption, discovering that taxes on the whole had no effect on the usage one way or the other. In place, they ascribe demographic aspects, like age, to the choice to smoke or give up. That affirmation - that taxes could not impact cigarette consumption - is contrary to a review released several weeks ago by a University of Toronto health professor.

Citing illustrations from a number of countries which include Canada and France, Dr. Prabhat Jha advised legislators to increase the price of cigarettes. "Bigger taxes are the best way to make people to stop smoking." However Malcolm demonstrates a very convincing example of how bigger taxes could in fact backfire in Canada and lead to more teen smokers. "Bigger taxes encourage the population to infringe the law, this refers to both buyers and sellers," she concluded.

By Kevin Lawson, Staff Writer.
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