Kicking the Habit Through a Tax on Cigarettes?

You might have placed quitting smoking on your list of New Year's resolutions. Smoking is incredibly hard to quit, with the pull of nicotine flowing through your blood stream and sending signals to your brain that you need to smoke even when you have the best of intentions not to do so. Unfortunately, nicotine addiction is linked to a multitude of health problems including lung cancer, emphysema and other bronchial disorders. One method that policymakers have attempted to use to curb smoking is raising taxes on cigarettes. But how much would it take for your smoking habits to be curbed by taxes?

Well, Australian policymakers hope to stop smoking by raising the cost of a pack of cigarettes to about $14. Specifically, the taxes on cigarettes would rise to $2.75 (U.S. dollars). They argue that for every 10% increase in the cost of cigarettes, there is a 4% reduction in the the number of those who smoke. Similar tax hikes were instituted in Australia in 2010 and did lead to a decline in the number of smokers. Considering the cost of cigarettes in the U.S., which sits at about $4.35 a pack in New York, the Australian cost is three times higher.

A tax on cigarettes is called a regressive tax and usually hits those in the lowest income brackets. The logic behind taxes cigarettes is that it will stop those who can least afford to pay the cost to stop first; the lower income individuals and young people. However, some U.S. studies have found that there weren't any declines in smoking among low income individuals, even after imposing a tax on cigarettes. Regardless of the effects, the truth of the matter is that taxing cigarettes increases revenue and says loud and clear that cigarette smoking is not the posh habit it used to be considering the high rates of cancer and other serious life-threatening illnesses.