Readers Question: Using data and your economic knowledge assess the case for and against a government completely banning the sale and consumption of cigarettes. AQA (15)
1. Cigarettes are a demerit good. People underestimate the costs of smoking, e.g. lower life expectancy. It has been suggested that the true cost of a packet of cigarettes is over $200. Therefore, the government is justified to try and stop people consuming goods which harm them.
2. Cigarettes have negative externalities on the rest of society. For example, it creates health problems of passive smoking. This leads to over consumption and is another justification for banning smoking.
3. Tax is insufficient for reducing consumption of cigarettes. Demand is very price inelastic because people become addicted. Therefore, banning cigarettes may be the only way to reduce consumption.
Problems of Banning Cigarette Sales and Consumption
1. It would encourage the black market. People are addicted so they would find a way to keep smoking. This would encourage criminal activity which the government would need to try and police. The potential profits for criminals would be very high. It could be a similar situation to prohibition in the 1920s and 30s in the US. Banning alcohol led to big rise in organised crime.
2. The government would lose all tax revenue. This amounts to over £7 billion. It would require other taxes to be increased.
3. It would cause unemployment amongst cigarette companies. However, South Korea is suggesting to bring the complete ban after 10 years. This gives people the chance to change their habits.
4. There are several alternative measures for discouraging cigarette sales. For example, banning cigarettes in public spaces has been quite effective in reducing consumption and discouraging people from starting to smoke. Also advertising to make people aware of the dangers of smoking (e.g. putting warnings on packets of cigarettes)
Cigarettes are definitely harmful to health. In some ways they are more likely to kill than other drugs which are criminalised. However, because cigarette use is so widespread, banning cigarettes completely would lead to very large black market and lose the government substantial tax revenues. It would make many ordinary people more likely to commit a crime to feed their habit.