Friday, July 17, 2009

ESTIMATED TOBACCO IMPACT ON THE PRIVATE SECTOR

FDA would impose a number of private-sector mandates, as defined in UMRA, on companies that manufacture or import tobacco products. CBO estimates that the total direct cost of these mandates would exceed the threshold established by UMRA ($139 million in 2009, adjusted annually for inflation) in each year, beginning with 2010.
 The bill would assess a fee on manufacturers and importers of tobacco products to cover the cost to FDA of regulating those products. The aggregate payments would sum to $235 million in 2010, and rise to more than $500 million a year by 2013. The bill would impose new requirements related to the labeling and advertising of cigarette and smokeless tobacco products. New warnings on packaging and 13 advertisements would have to be larger, and, in the case of cigarette warning labels, include pictorial graphics.
The bill would also prohibit cigarettes or any of their component parts from containing certain additives or flavors (other than tobacco or menthol) that are a characterizing flavor of the tobacco product or tobacco smoke. CBO has not been able to determine whether the direct cost of these provisions would be significant.
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Tuesday, July 7, 2009

Demand for cigarettes

The use of a rational addiction model for modelling the demand for cigarettes has been controversial. Critics of the model argue that nobody would sit down at an initial period, survey future income, production technology, investment/addictive function, and consumption preference for a lifetime, maximize the discounted value of his expected utility and decide to become an alcoholic.
Empirical work for testing the rational addictive behaviours has also yielded mixed results. In spite of the large number of studies on demand for cigarettes, only a few studies have been conducted for developing countries, despite the increasing cigarette consumption.
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Thursday, July 2, 2009

Expenditure on cigarettes

Households spend about one third of their income on food. Expenditure on cigarettes constituted 2.4 percent of total expenditure in 1987 and 1994, this share being higher in rural areas than urban centres due to the lower rural incomes.
Expenditure on cigarettes is nearly equal to the total expenditure on health and is more than double that of tea and coffee, nearly 7 times the share of fish, and more than half the share of milk and milk products. The proportion of consumer expenditure which goes to cigarettes is higher for people on higher incomes.
Taxes on cigarettes
Both domestic and imported cigarettes are taxed in Turkey. Domestic tobacco is subject to a tax of more than 200 percent, and tobacco is an important source of indirect tax revenue. The tax from tobacco amounted to US$2 300 million, which was more than one eighth of total indirect tax revenue in 1998.
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