Analysis Of Lee-Anne Goodman's Article On Tobacco Tax In Canada

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Lee -Anne Goodman’s article (2014) on Tobacco tax in Canada discusses tax on cigarettes and its impact on the economy. Goodman touches on the fact that revenue generated from tax is used towards helpful initiatives such as “National Anti-Drug Strategy from illicit street drugs to prescription drug abuse.”. Goodman also draws on a key point on how raising tax can decrease consumption of cigarettes. Increasing the tax on cigarettes has been seen to increase tax revenue and in turn decrease consumption of cigarettes. However, the increase in tax revenue, there can be an impact to health care. Revenue from healthcare is impacted (decreased) because less people are smoking and less people need health care. Taxation is a form of government policy …show more content…
With the $4 tax increase on cigarettes mentioned in Goodman’s article, the government can expect tax revenues reaching to upwards of $685 million (2014-15). The increase in tax revenue will be used on government initiatives that help lessen prescription drug abuse and illegal drug trade. Though tax money is used to help stop illegal drug trade, the high tax on cigarette has caused a spike in illegal tobacco usage, upwards to 21% (Ontario), this means less revenue towards businesses such as tobacco and smoke shops. As reviewed in economics, an increase in tax can be seen to lead to a decrease in demand and so that idea can be applied to tax on cigarettes. Smoke shops for example suffer from higher cigarette tax as higher tax means higher cigarette cost. That can lead to leads people to buying illegal tobacco and illegal cigarettes as seen in Ontario. This dilemma can negatively affect the economy as money that was originally going to the tobacco and smoke shops is now money that goes into the hands of illegal dealers. Taxation and particularly taxation of cigarettes can lead to both positive and negative …show more content…
Goodman’s article discusses the positive affects that a tax raise on cigarettes can do for the economy. Tax revenue generated from cigarettes can be used towards helping fight illegal drug trade and drug abuse. The scholarly publication on “The Impact of Tobacco Tax Cuts on Smoking Initiation Among Canadian Young Adults,” also concluded that increased taxes can help to stop younger people from purchasing cigarette and tobacco products, which in the long run stops younger people from developing addictions. Positive outcomes come from government regulations, acts and policies as well. With the government controlling marketing and selling of cigarettes, less people are exposed to cigarettes and thus less people get hooked on them. However, the positive outcomes, there are also negative outcomes, for primarily the economy. Heavy tax on cigarettes stops a percentage of people from buying cigarettes but those same people can go buy from illegal dealers and that revenue is lost. By heavy taxation, some people are forced to stop smoking and that leads to less patients needing health care and medication, ultimately reducing revenue for healthcare. As seen in Ontario, the average cost of cancer treatment costs $3,400 and if less people are smoking, less people need cancer treatment, that money adds up and ultimately, a lot of

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