Taxation
See also: Cigarette taxes in the United States
Many governments have introduced excise taxes on cigarettes in order to reduce the consumption of cigarettes
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In 2002, the Centers for Disease Control and Prevention said that each pack of cigarettes sold in the United States costs the nation more than $7 in medical care and lost productivity,[74] around $3400 per year per smoker. Another study by a team of health economists finds the combined price paid by their families and society is about $41 per pack of cigarettes.[95]
Substantial scientific evidence shows that higher cigarette prices result in lower overall cigarette consumption. Most studies indicate that a 10% increase in price will reduce overall cigarette consumption by 3% to 5%. Youth, minorities, and low-income smokers are two to three times more likely to quit or smoke less than other smokers in response to price increases.[96][97] Smoking is often cited as an example of an inelastic good, however, i.e. a large rise in price will only result in a small decrease in consumption.
Many nations have implemented some form of tobacco taxation. As of 1997, Denmark had the highest cigarette tax burden of $4.02 per pack. Taiwan only had a tax burden of $0.62 per pack. The federal government of the United States charges $1.01 per pack.[98]
Cigarette taxes vary widely from state to state in the United States. For example, Missouri has a cigarette tax of only 17 cents per pack, the nation's lowest, while New York has the highest cigarette tax in the U.S.: $4.35 per pack. In Alabama, Illinois, Missouri, New York City, Tennessee, and Virginia, counties and cities may impose an additional limited tax on the price of cigarettes.[99] Sales taxes are also levied on tobacco products in most jurisdictions.
In the United Kingdom, a packet of 20 cigarettes typically costs between £5.22 and £8.00 at 2007 prices, depending on the brand purchased and where the purchase was made.[100] The UK has a significant black market for tobacco, and it has been estimated by the tobacco industry that 27% of cigarette and 68% of handrolling tobacco consumption is non-UK duty paid (NUKDP).[101]
In Australia total taxes account for 62.5% of the final price of a packet of cigarettes (2011 figures). These taxes include federal excise or customs duty, and Goods and Services Tax (Australia) .[102]