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Taxation is a tool used by the Governments not only to earn revenue but also to control the national economy and consumer behavior. Governments impose higher taxes on imported goods that are locally manufactured? Why? So that the consumers opt for the locally produced goods as these will cost them less in terms of savings on import taxes. This helps in protecting the market for the local industries by influencing the consumer behavior and in the end it all results in more revenue to the Government because if the local industries sell well, they earn more and the more tax the Government gets.

Similarly the taxation is set at lower or nil rates on the essential daily life items and set at higher rates on non-essential items or luxury items. This is only fair because you don't want a poor person to pay more while he has already suffered the PAYG on his income. But a person who can afford to buy luxury items implies that he has "extra" wealth and so it is quite fair that he pay a part of that "extra' wealth in terms of tax on the luxury items. It also presents a deterrent for not spending too much else you pay more tax thus limiting the spending of people.

Cigarette smoking is both an act of extravagance on part of the smoker and more importantly a health crisis not only to the smoker but also to the surrounding people. There is something called "passive smoking" which means that although you don't smoke but because you are in the vicinity of a person who is currently smoking, you are in fact inhaling part of the smoke and its associated chemicals hence you are passively" smoking. So the moment a person lights a cigarette, he does not smoke himself but forces all the surrounding people in close vicinity to "smoke". This is not fair and there should be something to check this behavior.

Taxation is a polite manner of dealing with this hazard. Higher tax on cigarettes conveys the indirect message to smokers that smoking is an "expensive" exercise so avoid it. Its as simple as that! And the Government needs funds for providing health facilities to people when they develop the smoking related diseases. So it is only fair that they pay for their own treatment in terms of higher taxes.

Taxation on cigarettes should be further increased to develop the psychology that a person is not smoking a cigarette rather he is smoking out his own hard earned money!

Learn more about this author, Ahmad Hashmi.
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