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Ayush Joshi

Ms Sophia Rayan


12/10/2018 Essay on taxation of cigarettes

Bosnia and Herzegovina has the highest taxation on cigarettes out of all the

countries with a tax of 86%. Israel comes second with 85%. Then it is Slovakia with a tax of

84.6%. Bulgaria has 84% taxation on cigarettes. Finally, Poland with 82.6%%. The reason for

high taxes is that Europe’s average amount of smokers in percent is 27.3%. It is higher than the

global average of 22.7% which is really bad for the countries. From these percentages the main

reason that the government has put higher taxes on cigarettes are evident. The percentage of 15

or older people smoking are given below per country. Greece (42.4%), Bosnia and Herzegovina

(38.3%), Chile (38.0%), Bulgaria (35.0%),Estonia (32.3%).Although this is a reason of being

aware of the welfareness of the citizens this is not the complete reason why the government

imposes high tax.

By having to impose high taxes, there is an advantage of excluding the young

demographic to low income people who cannot afford cigarettes after taxation. This lowers the

amount of people who smoke and reduce smoking-related diseases. It is also a de-merit good

which means that it is harmful for the society. Raising the tax on products like these helps the

government get more revenue. In result, anyways the people kind of get back their money in a

form of better education in public schools or better infrastructure of public buildings etc. The

governments excise tax on certain products like alcohol, cigarettes etc, because it is not really
price elastic because they are no close substitutes to cigarettes and alcohol. Taxes that are

imposed on cigarettes, alcohol,drugs,soft drinks etc. These taxes are imposed by the government

in a highly manner. Governments don’t really care about the welfare of the people. They need

more revenue and imposing high tax is the only way they can earn money. The government

knows that even if they hike the taxes on cigarettes, people would still by them because it has an

inelastic demand. This fills the government’s revenue consumption and sin taxes are favoured

the most.

In India, the government is mostly corrupt and takes all the revenue for personal use rather

than public usage. The blame is being put on the lack of education for high percentage of

smokers. The government should provide free education for less income owners which would

eventually solve the usage of cigarettes. There are more dangerous forms of tobacco worse than

cigarettes and if sin taxes are being imposed on them, it doesn’t make a difference as it is cheap

before tax itself. The government imposes sin taxes also because the country like Greece might

be facing inflation or recession issues. This could be a good reason to raise sin taxes as the

government needs more revenue to achieve normality of their respective currency which also

involves foreign trade.


Staff, Investopedia. "Sin Tax." Investopedia. N. p., 2006. Web. 11 Oct. 2018.
Sousa, Gregory. "Countries That Impose The Highest Taxes On Cigarettes." WorldAtlas. N. p.,
2018. Web. 11 Oct. 2018.