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The Report Of Cigarettes In The Uk Economics Essay

The issue of smoking has become very serious in the UK in recent years. There are a decreasing number of smokers in the UK. According to Beckford (2009), the cigarettes rate have been down to the lowest and it is the expected effect to the UK government because cigarettes produce a significant negative externality, such as lung cancer, heart disease, thus the UK government make several policies to restrict the consumption of cigarettes, for instance, prohibit under age to consume cigarettes, printing possible disease on the packs, to impose a consumption tax.

1.2 Theory

The report employed demerit good and government policy to analyze how effective the UK government reduces consumption of cigarettes.

1.2.1Demerit Good

According to Anderton (2008) “A demerit good is one which is overprovided by the market mechanism and these goods produce large negative externalities, such as tobacco and alcohol.” Thus cigarettes are demerit good.

1.2.2 Government policy

The UK government policies could restrict the demand of cigarettes. Anderton (2008) said that there are some methods to control cigarettes and in this report, two methods will be existing, there are regulation and taxes.

1.2.3 Negative Externality

Anderton (2008) points that when the social cost greater than private cost, then there is negative externality.

1.3 Aims

The purpose of this report is firstly to intend to investigate the method which using to reduce cigarette rate in the UK. The second aim is to analyze that how effective they are. Finally, there will be a recommendation for the UK government to reduce consumption of tobacco.

2 Findings

2.1 Regulations

There are two types of regulations for reducing consumption of cigarettes, one is advertisement and the other is product regulation.

2.1.1 Advertisement

There is a warning signal where printed on the cases of cigarette, such as a fatal lung cancer picture or a bad heart picture. According to Jimmy (2009), the first restrict advertising happened in 1962 and it is still continued to restrict in advertisement. Jimmy states that ‘they find a significant effect of tobacco advertising on smoking, especially in children’. Consequently, as Jimmy said that it has influenced people to smoking.

2.1.2 Product Regulation

Another regulation is restriction on the process of producing cigarettes. According to Department of Health in the UK (2009), the ingredient of cigarettes should not be exceeding the legal requirement which means tar, carbon monoxide and nicotine must under the legal quality.

2.2 Taxes

Figure 1 shows that the cigarette includes heavy tax. It is preceded that the annual tax is increasing. In 1990, the tax burden was 1.20 pound, but it is 4.45 pound at the present. However the tax incidence does a slightly increasing, there is only 4% difference between 1990 and 2009.

Figure 1 “The UK cigarette prices”

Source: (Tobacco Manufactures’ Association 2008)

2.3 Consumption

Figure 2 shows that the consumption of cigarettes has been reduced. There is a significant distinction between 1990 and 2007, about 40 billion cigarettes difference. In addition, it is response to it is effective that the UK government has been in reducing the consumption of cigarettes.

Figure 2 “The UK cigarette consumption”

Source: (Tobacco Manufactures’ Association 2008)

3 Discussion

3.1 Regulation

3.1.1 Advertise Regulation

Anderton (2008) states that the government could may control advertisement for the demerit good. Therefore the UK government force tobacco producer print warning signals on the box to remind consumer cigarettes could cause some terrible diseases and as Jimmy (2009) said that many people have quit from smoking because they saw the warning that the terrible pictures on the packs. Thus, this regulation has been help people to quit from smoking and it is valid method for reducing its consumption.

3.1.2 Product Regulation

Anderton (2008) point out that government could require the production. According to the findings, the UK government requires the cigarette producer to produce requirement goods. Therefore, some producer can not make the prescriptive goods, then the supply may be decreased and the price of goods increased. Thus, some people could not afford it and quit from smoking.

3.2 Taxes

As finding section shows that the UK government put a heavy tax on the cigarettes.

It improved the price of cigarettes and consumer should be cost more money for cigarettes. In addition, figure 1 shows the price is increasing, but figure 2 shows the consumption is decreasing, thus it is possible a reason that the taxation.

4 Conclusion

4.1 Summarize

In short, the UK government uses correct methods to reduce the demand of cigarettes. There are advertisements and product regulation which effective in reduction of cigarettes, and the taxation is also an effective method to reduce the demand.

4.2 Recommendation

Although the demand of cigarettes is exist and it is still a problem in the present, but if the government proceeds to impose a heavy tax on the tobacco and their regulations are working, then it is effective that the UK government has been in reducing consumption of cigarettes.

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