Tobacco Taxation Policies Essay

450 WordsNov 28, 20132 Pages
Tobacco Taxation Policies Guillermo Reveco Pablo Valderrama Silva Searching and looking into the web, we realized that in our country today the tax for the tobacco is a 59.7% above its consumer price and for a pack of cigarettes is a 62.3% above its consumer price as the SII says. In the last years the government has been increasing those percentages a lot; the reason many people could think: decrease the quantity demanded in our population, focusing primarily on smoking teenagers. This could work in an elastic industry but in the tobacco commerce this is not the best idea, it’s one of the most inelastic industries the world has. So, that wasn’t the main reason for Sebastián Piñera in cigarettes price rising. A few months after the 27/F earthquake the president and his team were trying to search in many ways how to make money for the Chilean reconstruction. They arrived to a brilliant idea, look into the most inelastic industry in our country and raise the taxes of that industry. So today, something that not many of us know, an 82% of the price for a pack of cigarettes it’s only taxes, about 16 of those 20 cigarettes that came in a pack are for paying taxes. The results in two tears: president Piñera said in the last May 21st that the 96% of the ruined people houses of our country are now rebuilt or in process of rebuilding, and much of the money needed came from taxes. We could think now that no one wants you to stop smoking, as the tobacco consumption has an inelastic behavior, the government wins a lot of money on your cigarette purchase. The policies for the battle against the tobacco have to be others, some things like the new law about non-smoking in many places. As this industry isn’t perfectly inelastic, there are also many cases of teenagers that stop smoking because of the high cigarettes price but not much adult population, they have been smoking

More about Tobacco Taxation Policies Essay

Open Document