... of tax borne by smokers is greater than that on any other excise goods. Tax (excise duty plus VAT) currently accounts for just over 84% of the price of the leading brand of cigarettes. By way of comparison, beer is taxed at 30%, wine at 52%, spirits at 62% and unleaded petrol at 76%. To understand why these products are 'prime targets for indirect taxation' you need to look at their market systems, all of which are very similar. The market system of these goods is the determining factor. The core of the market system is the supply and demand of a product. Demand states that as it increases the price of the good in question falls, and vice versa as prices increase, demand falls. However the products Cigarettes, Alcohol and Petrol don't seem to follow this law. The reason is because of the demand determining factors. They are ...

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