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Not sure the logic on that works outs. On the day ads are banned tobacco companies see a drop in their costs, but no change to revenue. The price of their cigar
by avianlyric 6y ago
Not sure the logic on that works outs. On the day ads are banned tobacco companies see a drop in their costs, but no change to revenue. The price of their cigarettes neither goes up or down.
Without a price change the government can’t benefit because the tax is proportional to the price.
So tobacco companies see a drop in costs, no change in revenue, which results in increased profits.
In the future the government could increase the tax rate, and try to force tobacco companies to drop prices to compensate, which could allow governments to extract the extra profits from reduced adverts. But that doesn’t strike me as the kind of behaviour governments participate in, a little too complicated and risky. Also very likely to have unforeseen consequences as it’s unlikely that every tobacco company was spending the same proportion of revenue on ads.
Not to say that tax rates didn’t go up. Just seems unlikely to be directly linked to the banning of ads. More likely they went up just because they can keep hiking the taxes until all the tobacco companies go bust.