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Essay text:
Alternately, the production can be exported.
The intended effect is that the incidence of smoking gets reduced. The tax is levied on the consumers. This is the reason why the proposed tax of $1 will increase the price of a cigarette pack by $1. For administrative reasons the tax may be collected from the producers, however, this tax is clearly on the consumers.
The tax will affect the demand for cigarettes. It has been shown through several empirical studies that imposition of taxes leads to a decrease in smoking. Those states that have imposed taxes have witnessed lower levels of smoking and those states that have not imposed steep taxes have witnessed lower levels of reduction in smoking...
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