UK Dutty Tax on Tobacco

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jorgesoler

Can't Leave
Dec 3, 2014
401
74
The law of demand states that there is an inverse relationship between quantity demand and its price, that is, all else being equal, as the price of a product increases, the quantity demanded falls, and as the price decreases, the quantity demanded increases. This table shows the mechanics of this law as the red line shifts to the right (demand) along the blue line (supply):
supplyanddemand_zps168adf15.png

An exception to this rule are both the so called Giffen and Veblen goods, but I shall not go into this topic, interesting though it is, to keep this post short and easy to read. As for this post, this trend clearly shows that the nanny state perspective does not work when it all comes down to lecturing the citizen. If the whole idea was to put people off smoking, one must conclude this policy is not working. According to the law of demand, we should have expected less people smoking as excise on tobacco increases year after year, but this is not what the charts show. In 2014, for instance, the UK Tax and Revenues Office was able to excise £12.3 billion on tobacco revenues, and it is a fact this trend has been increasing since 1990. Now, here is the thing. A tin of Royal Yacth, which is nothing but a staple, will set you back in the US some $10 as on average (I know this could be cheaper, but I will leave it at that) whereas in the UK the same tin will cost £12.80 (that is, 20 USD). So you want to know why I am a free market anarchist? Because I bloody hate state government. Sometimes I wish we could have friendlier laws like you all have in the US. You guys started a revolution against England when tax was at 3%. Now in the UK we pay 20% on VAT + other excises and duty tax (not only on tobacco) and everyone seems to believe this is perfectly fine. Well, I for one believe this is totally ridiculous and I think it is about time someone will put a stop to this.

 

warren

Lifer
Sep 13, 2013
11,715
16,280
Foothills of the Chugach Range, AK
If you must have something, you must pay the price. Hence the taxes on fuel, tobacco, water (in some places), booze, etc. It's just the way of life. If I produce something you have to have, you have to pay my asking price. No dickering. If I have something you want, then we can dicker. It's a matter of how much you desire what I have and how much I want your money.
Tobacco is only a necessity to some, so governments can keep upping the taxes as so few will complain and so many will benefit from the moneys government doles out to the voters for votes. No-one needs to keep smokers happy. Smokers do not have the votes to impact an election. No one but another smoker cares what you, as a smoker, thinks.
Trust me, US taxes on tobacco and tobacco products will continue to rise as long as people who crave it are willing to pay the price.
I will say that all of our complaining about prices on the forum gets wearisome. No one, in a position to reduce taxes, wants to hear it. But, I suppose we feel a bit better for our outrage, and misery does love company.

 

jorgesoler

Can't Leave
Dec 3, 2014
401
74
If you must have something, you must pay the price.
It must be very easy for you to say that since you live in the US. What you don't take into account in your argument is the fact the higher prices will lower demand, and this in turn will affect the economy of producers as a whole. On the other hand, government should not steal money from people so that other people can benefit from it. If taking 100% of a producer/worker's income is slavery and theft, do you mind if I ask you at what percentage it is just tax (99%, 80%, 47%, 5%)? Please do note I am not mentioning how many people live on the dole on the tax payer's money whereas others, like myself, seem to have a legal obligation to support them. The only rights humans have are to liberty, property and self defence. By extension, any right that depends on somebody else's wealth is not a right but a privilege some government official bestow on certain people. Government don't produce anything, so in order for them to give you something they have to deprive other people from it. If you think this is fair, I don't.

 

warren

Lifer
Sep 13, 2013
11,715
16,280
Foothills of the Chugach Range, AK
I'm not saying I like it. I'm saying that it's the way things are. Lowering demand is exactly what is desired with respect to tobacco products. What you or I want is entirely beside the point. What is desired is that you and I quit the dirty weed and "they" just have to keep raising the taxes until you and I can't afford it. Making you or happy is not something anyone in a position of authority needs to consider.Government does not exist to make things better. It exists only to ensure its continued existence. And, it accomplishes this by keeping the masses mollified. We smokers are way too much a minority for "them" to show us the least consideration.
You and I just have differences in how we state the problem. You introduce care and feelings into the argument. I'm simply more pragmatic. Governments want their people to quit smoking and will use the methods available to reach that goal. So, some people will quit smoking when they cannot afford it and the desire to eat becomes more important than nicotine. Those that can afford it, will continue to smoke. Life is not fair and was never intended to be. It's a challenge. In Ireland the government wants to raise the water taxes, some aren't going to be able to afford it and will have to sell their homes and rent or emigrate. I'm not saying it's fair or right, I'm just saying that's the way things are. I leave the idea of a general revolt to the next generation. At some point people will have enough of government as it is and changes will be made. Not in my life time however.
It's decision time for some, eat or smoke? Buy a car or use public transportation? Can't pay for water (you must have water)then one must sell the house and rent, move or get a higher paying job. Facts are facts, one must adapt or suffer.
I bought into the idea, many years ago, that I was the only person in the universe that I could rely on and structured my life accordingly. I've been blessed with a certain amount of luck, foresight and self-sufficiency so that I can live my live as I wish. I'm cynical, a bit pedantic, distrustful of others and blame no-one for my position in life. I do credit others for some of my success, teachers, mentors and parents are but a few but, my short comings are entirely of my own making.
Again, life isn't fair. I never thought it was, nor did I ever think it was suppose to be. We're born, we bust our hump and then we die.

 

jorgesoler

Can't Leave
Dec 3, 2014
401
74
And who the hell are they to tell me what I can and cannot do in victimless crime cases? Am I property of the state? Who says life was never intended to be fair? Like I said before, taxes are a burden on the producer, not on the consumer, so it hinders economic recovery as a whole. It seems like in America there is enough room for further tax increases, so at this point in time it is only the consumer who pays for tax, but if they were to get any higher, provided tobacco producers wanted to maintain demand levels where they are, they would have to pay for the tax bill like they are doing in the UK.

 

warren

Lifer
Sep 13, 2013
11,715
16,280
Foothills of the Chugach Range, AK
I have never heard anyone describe life as being fair or that it should be fair. I've heard the usual complaints that life is not fair. What a dull world that would be if life was indeed fair.
Corporations and other businesses do not pay taxes! The taxes are pushed down to the end user. Companies are only the middlemen in the tax collection business. I wouldn't own stock in a company that did not have their taxes covered by the price of the product. Raising taxes does one of two things, raise the price of a company's commodity or the company goes out of business because they cannot pass the tax down to the consumer as their product would be priced higher than the market would support.
This is all basic economics and at one time was taught in high school in the US. Again, taxes on businesses are pushed down to the end customer. Businesses do not pay taxes. All costs, be it health care, salaries, taxes, bonuses, rent, utilities, etc. are passed to the customer. You and I, when we buy a pipe are paying all of the costs of the manufacturer of that pipe, from the gathering of the briar, storage as it ages, all handling including carving and assembly, shipping to a retailer, all of the retailer's costs associated to his business, all of the taxes, salaries, and so forth.
You buy something in England the price you pay includes all of the taxes the various businesses involved in getting the pipe to you. There's no denying that. You pay those taxes, not the retailer or the manufacturer. Every single tax accessed comes out of the end user's pocket period, end of story! Businesses are simply the conduit for getting more of your hard earned money to the government.

 

jorgesoler

Can't Leave
Dec 3, 2014
401
74
Corporations and other businesses do not pay taxes! The taxes are pushed down to the end user.
According to the laws of demand, this is not true. Lets say, for example, that something costs $5 and that the costumer is happy to pay $5 for it. If you increase this price, according to the laws of demand, production will decrease as less costumers will be willing to pay for the extra money the producer is asking them for. The only way around this is to lower the price tag to previous levels so that more costumers will be wiling to buy it. If that increased price is due to taxes, the producer has but two options. Either to reduce his profit margin and keep production the same (provided he can afford it), or pass the tax bill onto the consumer and reduce production as less consumers will be willing to pay for those items. Either way, he loses. Like you are saying, when prices are high enough, the company might go out of business if current market prices cannot be supported by current demand levels, so you are kind of contradicting yourself.

 

warren

Lifer
Sep 13, 2013
11,715
16,280
Foothills of the Chugach Range, AK
The economic situation is that if you do not price your product so as to pay all the related costs, taxes included and include a profit, your business will cease unless, for some unfathomable reason, it is purely altruistic and designed to lose money or merely break even.
If you buy something, rest assured you are paying your tiny percentage of the maker's taxes. If the taxes are at a level, or the production costs (includes taxes) that a product cannot be made and sold for a profit then there is no incentive to manufacture such a product. Unless, of course as in the tobacco growing business in the US, government takes some of the taxes you paid and gives them to the grower as an incentive to continue even though profit is minimal.
A interesting subject in and of itself. Government paying farmers to grow a product they wish would just go away.
Anyway, I'm not an economist and have about run out of ways to state the obvious with regards to who pays taxes. Individuals pay taxes, companies are simply a pass-through to get your money to the government.

 

jorgesoler

Can't Leave
Dec 3, 2014
401
74
The whole point to make here is that without tax, according to the laws of demand, more business would be created, therefore, state government is bad for the economy.

 
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