The Melbourne Opinion - blog

[enwiabe]

costa you can't spam topics of news and politics with links to your blog, keep it to the one thread please

[costargh]

No worries Dan. thanks for clearing that up.

[TrueTears]

Side note: the blog for today.

Who really suffers from the new cigarette tax increases?

Hopefully the tax incidence is more on the buyer than the seller, so buyers have to pay more of the tax and so are less willing to buy cigarettes. Also hopefully the demand/supply of cigarettes is inelastic so that no deadweight loss occurs.

And we really don't know who suffers from the new cigarette tax increases, remember the burden of the tax does not depend on whether the tax is put on the seller or buyer, rather we need to look at the elasticities of demand/supply.

[schmalex]

Actually, the government is hoping that the demand is NOT inelastic and does cause a deadweight loss because that means that fewer people are smoking cigarettes and the costs for health and negative externalities of passive smoking are minimised.

Also, how is Carl Williams synonymous with Melburnians? That confuses me

[TrueTears]

But a deadweight loss is a social loss, which does not benefit the society Plus the smaller the deadweight loss, the larger the tax revenue the government can gain.

Also they shouldn't charge too high a tax or else this decreases the tax revenue.

[schmalex]

It's a social loss, but the result of the social loss is that negative externalities are reduced and the costs to the healthcare system are reduced. Also, remember these "benefits" to society that we are losing are the benefits that smokers gain from having a cigeratte, and the profits to tobacco companies so in my opinion it's no great loss, but some people see things differently.

To answer your question, I personally have little sympathy for people who can barely afford to feed their family, but can somehow afford to spend heaps of cigarettes. I know tobacco is addictive, but it isn't IMPOSSIBLE to quit, or at least cut back. Surely if your family really needs food, you can muster up the self will to quit or cut back.

[Fyrefly]

I support the tax increase.
The only down-side is that I'll have to put up with customers complaining about the price increases.

Schmalex is correct TT, you haven't considered the nature of the DWL, benefits, and negative externalities.

Smoking is relatively inelastic - a 25% increase in price is only expected to result in a 6% decrease in the consumption of cigarettes.
However, even this small percentage figure decrease has big real-life effects.
15,000 Australians die prematurely from smoking every year.
Consider the effects this has on our economy and on our health system.
Not only is the government increasing its tax revenue, but it is decreasing expenditure on Australia's health system.

This is also one of the smartest political-economic decisions the government could make.
Cigarettes can still be purchased in relatively small quantities duty free - but cigarettes are a fast-moving consumer good; people don't plan to go overseas so they can purchase cigarettes on their return.
If the government just went and banned cigarettes, they would lose all that tax revenue and it would open up a huge black market for cigarettes (which, as you will study soon, would be hugely detrimental to society).

I also have little sympathy for the sorts of people who say they can't afford to feed their children, but still manage to buy cigarettes.
I know the sort as well - I serve these people regularly at work.
They'll hand over a whole bunch of 10c pieces, find they're 20 cents short, and they'll ask the people waiting in line for money.
They use the money Centrelink or the Salvation Army has given them to buy cigarettes, instead of supporting their families.
Some will even use an essentials card to buy food items, come straight to the counter to demand a refund, then use the refund to buy cigarettes.
The increase in price won't make a difference for these people, because they don't support their families as it is.

My mum's a smoker, and I'll know she'll bitch and whine about the price increase, but if it makes her quit or even cut back, I'll be glad.
I don't want her dying prematurely and the bottom line is that, ultimately, cigarettes kill.

[Cthulhu]

My mum's a smoker, and I'll know she'll bitch and whine about the price increase, but if it makes her quit or even cut back, I'll be glad.
I don't want her dying prematurely and the bottom line is that, ultimately, cigarettes kill.

Yeah my dad is a smoker and I support it hoping that he'll quit because like you I don't want him dying 'young'. Although in the end smoking will still get you because you've already done the damage. It just wont be as bad as if you kept smoking.

[ninwa]

interesting opinion

Charity workers are also unhappy about the speed of the tax increase.

Senior researcher with the St Vincent de Paul Society, Dr Andy Marks, says poorer people are over-represented among smokers and it would help them more if the Government placed more of an emphasis on educating people about the benefits of choosing a healthy lifestyle.

He says people will continue to spend money on cigarettes rather than on necessities.

"It's a massive hit. It's expecting everyone to go cold turkey overnight really and I think the first thing we'll see is the majority of people, because it's an addictive drug, will continue to smoke, he said.

"We'll see an immediate impact. In fact we'll have an increase in people seeking assistance.

"We shouldn't rush to make value judgments here either, because as I mentioned it is an addictive drug, but there's also the psychological factors that go along with smoking.

"For many people, their 10-minute cigarette on the back porch is their only reprieve from an otherwise very oppressive existence, if you like."

also lol

The Federal Government may have to pay more than $3 billion a year to cigarette companies if its plain packaging plan goes ahead, a free trade expert says.

Tim Wilson from the Institute of Public Affairs says the move could cost taxpayers $3.4 billion a year in compensation to tobacco companies.

"Stripping intellectual property from products is akin to stripping someone of their physical property, and requires compensation," he said.

[schmalex]

The Federal Government may have to pay more than $3 billion a year to cigarette companies if its plain packaging plan goes ahead, a free trade expert says.

Tim Wilson from the Institute of Public Affairs says the move could cost taxpayers $3.4 billion a year in compensation to tobacco companies.

"Stripping intellectual property from products is akin to stripping someone of their physical property, and requires compensation," he said.

they talked to a lawyer about this on lateline, and apparently tobacco companies really don't have much of a claim for this, they're just trying to scare governments into not doing it

[costargh]

If anyone is interested in being an author on the website just PM me.

Have two who are drafting blogs atm. Would like to make it a collaborative effort etc.

Good experience especially for people who are looking into careers in journalism or politics etc or just have a general interest in writing and expressing your own opinion. All bloggers are able to have their own style and creative freedom.

PM me

[costargh]

What's your favourite Melbourne landmark?
http://www.themelbourneopinion.com/2010/05/six-melbourne-landmarks-melbourne.html

[costargh]

What does everyone think of Foursquare?
http://www.themelbourneopinion.com/2010/05/seven-foursquare-melbourne-opinion.html