G. PROBLEM: TABAC TOBACCO

The Tabac Republic is a small country that imports cigarettes from abroad and produces cigarettes domestically. In 2000, Tabac introduced a new internal tax of 5 percent on all cigarettes, whether produced locally or imported.

To assist in the enforcement of the regulation, cigarette packages must have a "tax stamp" on them in order to be sold. The stamp certifies that the tax has been paid. The tax stamp is provided by the Tabac Tax Authority (TTA) and looks like this:

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