Recently, the government noticed that the consumption of cigarettes has increased among working individuals. To counter this increase, the government decides to raise the cost of cigarettes by increasing the excise tax on them. After six months, the government observes that the consumption of cigarettes has decreased to some extent. Which type of taxation did the government use?

Indirect tax, on a good or service. The tax is paid by the consumer of the goods when the item is bought, but the tax is paid to the seller or maker of the item. That seller or maker, then pays the collected tax on the item to the government.

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arshikhan8123 arshikhan8123 · Answer 2 · 2022-06-15T15:46:11+02:00

The government uses indirect taxation.

Should the government increase indirect tax on cigarettes?

Increasing taxes on cigarettes is a win-win proposition significantly increasing cigarette taxes results in fewer kids starting to smoke, and in more adults quitting while at the same time providing substantial revenue to fund important health, as well as tobacco prevention programs.

Can smoking be prevented by raising the price of cigarettes?

Raising cigarette prices is an effective tobacco control policy in reducing smoking among youth. While most studies of young adults found that increased prices also result in reductions in smoking behavior, the magnitude tends to be smaller than for youth.

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