Essay on Cigarette Tax Hike Sparks Panic Buying

1354 Words Aug 20th, 2013 6 Pages
Section 1
In the article ‘Cigarette tax hike sparks panic buying’, Hall (2010) discusses the effects of tax increase on cigarettes. The government has decided to raise the tax on cigarettes by 25%, costing $2.16 more on a pack of 30 cigarettes. This government intervention is an attempt to stop people from smoking and reduce the health bill caused by those who smoke. The increase in tax is expected to save $5 billion more of the people’s tax dollars and the government decided that it will be put into a better use for its health and hospitals reparations. This contractionary fiscal policy is expected to reduce the total tobacco consumption by approximately six percent and drive down the number of smokers by 87,000.
The tax increase has
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The time difference between the Prime Minister’s announcement and when it will take effect will surge cigarette sales in the short run, for people will want to stock up before the price increases, and was depicted in the article where it mentioned that supermarket chains and tobacconists have been receiving greater demand on cigarettes. Also, retailers are buying out cigarettes to stock up before the raise in price increase takes effect. This surge of demand has affected suppliers such as Simon Beynon who pointed out that the Government’s decision to increase tax will very likely to ‘smash’ business (Hall, 2010).
Furthermore, the community where the business gets its resources on will certainly be affected. Tobacco pickers, employees in the tobacco industry and middlemen may lose their job in the long run due to the fall in supply of tobacco, given that the tax hike will reduce tobacco consumption as mentioned earlier.
Charity workers may be an unforeseen stakeholder that is impacted by this fiscal policy. The impact on charity workers is an unintended consequence by the Government, given the complicated nature of the society; they are not able to anticipate all possible outcomes on their decision to raise taxes on cigarettes. Charity workers who give guidance for those who wants to give up smoking, such as Quit Victoria as the article point out, the price upsurge will cause an immediate impact, and it is very

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