The main objective of levy of tax on tobacco products is ________.

to raise tax revenue

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to punish the tobacco companies

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to encourage production of other non-toxic products

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to discourage consumption of tobacco products

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Solution

The correct option is D to discourage consumption of tobacco products
Higher prices encourage cessation and prevent initiation of tobacco use. They also reduce relapse among those who have quit and reduce consumption among continuing users.

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Similar questions

The government should stop permitting tobacco companies to subtract advertising expenses from their revenues in calculating taxable income. Tobacco companies would then have to pay more taxes. As a consequence, they would raise the prices of their products and this price increase would raise the prices of their products and this price increase would discourage tobacco use.

Which of the following is an additional premise required by the argument above?

Statement: Should the sale of tobacco products be restricted to only a few outlets in each city/town?

Arguments:

I. Yes, this will substantially reduce consumption of tobacco products.

II. No, those who want to purchase tobacco products should get them at convenient locations.

Q. Suppose a ban is imposed on consumption of tobacco. Examine its likely effects on: (a) gross domestic product; and (b) welfare.

Statement: Should there be a total ban on tobacco products and smoking in India?

Arguments:
I. Yes. It is wrong to smoke away millions of money.
II. No. It will throw thousands of workers in the tobacco industry out of employment.
III. No. The government will lose huge amount of money as it will not earn by way of taxes on these products.

Cigarettes constitute a mere $20 %$ of tobacco consumption in India, and fewer than $15 %$ of the 200 million tobacco users consume cigarettes. Yet these $15 %$ contribute nearly $90 %$ of the tax revenues to the exchequer from the tobacco sector. The punitive cigarette taxation regime has kept the tax base narrow, and reducing taxes will expand this base. Which one of the following best bolsters the conclusion that reducing duties will expand the tax base?

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The main objective of levy of tax on tobacco products is ________.

The correct option is D to discourage consumption of tobacco productsHigher prices encourage cessation and prevent initiation of tobacco use. They also reduce relapse among those who have quit and reduce consumption among continuing users.

The correct option is D to discourage consumption of tobacco products
Higher prices encourage cessation and prevent initiation of tobacco use. They also reduce relapse among those who have quit and reduce consumption among continuing users.