This is the Question (b) Discuss the consequences of imposing a tax on the cigarettes for producers, consumers and the government.

I am looking for adding more information and words to my original answer by using the case studies and online researches. Below is my original answer with the ********. Thank you

************(In terms of the producers, they need to promote the prices of the cigarettes, because of the imposing tax, therefore producers impose the prices to maintain the profit of selling cigarettes. Also the producers will be able to sell cigarettes and tobacco in the black-market, so that they can avoid tax evasion, reduce higher tax income, and producers can use a lower selling price to sell their products.

The other consequence is that producers may collapse by imposing a tax on cigarettes. When the cigarette tax was raised, the demand for cigarettes decreased. The reason is that consumers' attitude toward prices becomes negative, thus they do not want to buy products with a higher price. Therefore, the producers reduce income sources. They have no profits to make the products and enter it from other countries, then they may gradually have no revenue and starting losses. Finally, causing them to collapse, they close the cigarette store.

In terms of the consumers,

In terms of the government, the first consequence is that the government can give citizens more social welfare. Since imposing the tax on cigarettes, the government receives the tax that all turns to be their income. Hence, that will be increasing their income. Moreover, the government needs to return the social welfare to the public by collecting the tax on cigarettes. That can solve the main social people's livelihood issue in the government policy. For instance, the government can launch supermarket coupons, cash volume, and many other things to the citizens. It not only can return the social welfare to the public, but also can appease those due to imposing the tax on cigarettes that people have no money to buy.)***********

Below are the given case studies for the assignment.

Case Study 1 (50 marks) NEWS 1 (South China Morning Post, 20 April 2021)1 HK$358 million worth of contraband cigarettes seized in Hong Kong so far this year up 137 per cent from whole of 2019 The goods, if legally imported, would have helped the government generate more than HK$250 million in taxes Law enforcement source attributes increase in seizure volume to enhanced enforcement and interception of sea-route smuggling Authorities have confiscated HK$358 million worth of contraband cigarettes so far this year up 137 per cent from what was seized in the whole of 2019. Nearly 133 million black- market cigarettes were seized between January 1 and April 15. The goods, if legally imported, would have helped the government generate more than HK$250 million in taxes. The haul was about 65 per cent of the 205 million illicit cigarettes confiscated last year. About 56 million contraband cigarettes worth HK$151 million were seized in 2019. A source put the sharp rise in the seizure volume down to enhanced enforcement actions. We struck whenever intelligence indicated contraband cigarettes were being smuggled into the city or illegal tobacco products were being stored, he said. He also said seizure numbers rose because illegal tobacco traders had used sea routes to smuggle cigarettes into the city due to the closure of major border checkpoints amid the coronavirus pandemic, and shipping containers could carry larger volumes of the contraband item. The source added that smugglers were also using circuitous routes to avoid detection. Black-market cigarettes are being shipped through various ports in Asian countries before being illegally smuggled to the final destination, he said, adding that one such shipment might take several months to arrive. He said countries of origin included the United Arab Emirates, Vietnam and mainland China. 1 Source: Factiva (https://www.scmp.com/news/hong-kong/law-and-crime/article/3130163/hk358- million-worth-contraband-cigarettes-seized-hong) 2021-22 2 After the Easter break, police and customs officers confiscated about 33 million cigarettes worth HK$88 million from warehouses in the New Territories in three raids between April 10 and 12. NEWS 2 (The Standard, 31 May 2021)2 Heat turned up on e-cigarettes The government should ban instead of regulate electronic cigarettes, or the public will have to pay a higher cost, said Lam Tai-hing. Lam, the University of Hong Kong's chair of community medicine, made the comment ahead of World No-Tobacco Day today, saying the cost of regulating e-cigarettes will be high. Allowing ecigarettes will harm youngsters and the public healthcare system, he said. Lam said the authorities would have to invest a lot of money if they wanted to regulate these new tobacco products, since they may need to set up a new laboratory. "The most cost-effective way is legislating to ban e-cigarettes and heated tobacco products." In 2019, the government proposed the Smoking (Public Health) (Amendment) Bill, which banned the import and sale of electronic cigarettes. The amendment, introduced to the bills committee, was later shelved. However, some lawmakers see regulation as the way forward. Peter Shiu Ka-fai said that 64 countries, including China, had started regulating these products. He also said that authorities should handle e-cigarettes and heated tobacco products separately, as there is insufficient evidence to ban heated tobacco products now. Lam criticized those who opposed the bill, saying they usually had vested interests. "They are sacrificing public interest and health for the benefit of a small group of people." Henry Tong Sau-chai, the chairman of the Hong Kong Council on Smoking and Health, said tobacco companies were the only beneficiaries if lawmakers decided to take a laid-back attitude on the issue. Tong said there were misconceptions about such products, saying, "I once read that smoking ecigarettes can improve your skin." He added that the council was introducing a new ambassador, Wise Mike, to debunk myths about tobacco products on social media. However, Tong said the pandemic could be an opportunity to quit, as calls to the smoking cessation hotline doubled. He suggested authorities expand the statutory no-smoking areas to bus stops and within 10 meters of elderly homes, schools and social welfare organizations and increase the tobacco tax.