Australian Taxes on Illegal Trade of Cigarettes Article Review

Presents an economic analysis of the article "Illicit smokes up 25% since tax rise" by Eli Greenblat about the effects of increased taxes on the illegal trade and smuggling of cigarettes in Australia.
# 150451 | 1,390 words | 7 sources | MLA | 2012 | PK
Published on Feb 17, 2012 in Economics (Econometrics) , Economics (Taxation)


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Description:

This paper explains that, a year after the Australian government increased the taxation on cigarettes and planned to deter its use by legislating for the plain packaging of cigarettes, Eli Greenblat wrote the article "Illicit Smokes up 25% since tax rise" about these increased taxes on cigarettes in Australia. To analyze this article, the author uses econometrics to demonstrate the supply and demand curve of discouraging cigarette consumption by levying heavy taxes, of black markets hindering tax revenue, of tax and inelastic goods such as cigarettes and of taxes and economic efficiency in this market. Based on the economic theory in this article, the paper argues that these decisions by the Australian government will not reduce cigarette consumption because cigarettes are an inelastic commodity thus people will continue to consumer them regardless of the tax increase. Charts are used to demonstrate this analysis.

Table of Contents:
Table of Contents
Article Summary
Introduction
Analysis
Demand and Supply
Elasticity
Tax Revenue and Black Markets
Economic Efficiency and Taxes
Conclusion

From the Paper:

"Demand is an ability and willingness of people to buy certain goods and services. There are several factors that cause a change in demand. The change in demand is usually represented by movement along the curve.
"Imposition of taxes on cigarettes would make cigarettes more expensive. This means that less people would demand it now as a general rule higher the price, lower is the demand. This can be represented in the following diagram:
"It can be clearly seen in the diagram, how tax reduces the quantity demanded and supplied in the market and how the price of a good increases after the imposition of a tax. This means that the consumers will now have to pay more for a pack of cigarette. This would reduce their willingness and ability to buy cigarettes and the new equilibrium will form at Q with tax where the quantity demand and quantity supplied in the market is less than when there were less taxes. This was what the Australian government tried to do. They tried to reduce the consumption of cigarettes by making them more expensive by levying a tax on them."

Sample of Sources Used:

  • Bamford, Collin, and Susan Grant. OCR AS Economics Students Book. London: Heinemann, 2008.
  • Chrystal, Alec, and Richard Lipsey. Economics. London: Oxford University Press, 2004.
  • Daft, Richard L. Management. New York: The Dryden Publishing, 1994.
  • Greenblat, Eli. "Illicit smokes up 25% since tax rise : tobacco boss." The Age, March 1, 2011.
  • Hunt, Albert R. "Politics, Not Economics, Drives Anti-Tax Stand." Bloomberg , July 17, 2011.

Cite this Article Review:

APA Format

Australian Taxes on Illegal Trade of Cigarettes (2012, February 17) Retrieved November 29, 2020, from https://www.academon.com/article-review/australian-taxes-on-illegal-trade-of-cigarettes-150451/

MLA Format

"Australian Taxes on Illegal Trade of Cigarettes" 17 February 2012. Web. 29 November. 2020. <https://www.academon.com/article-review/australian-taxes-on-illegal-trade-of-cigarettes-150451/>

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