President Yushchenko refuses to sign a law that would increase taxes on cigarettes. One can (should) debate whether or not the taxes on cigarettes today are at their ideal level. The arguments used by the presidents against this law, however, seem like written by the Tobacco Industry.
"Yushchenko said in his proposals that he cannot sign the law, as the increase in excise rates for tobacco products creates the risk of tobacco smuggling to Ukraine. He said that according to calculations, after the increase in tobacco excise rates, marketable cigarette brands in Ukraine would cost 1.5 times higher than in Russia.
Moreover, the introduction of new (higher) excise rates for tobacco products may lead to the reduction in output, and, consequently, to the fall in cigarette sales.
Yushchenko also said that the fall in the production of tobacco products could bring the reduction of jobs in the industry."
A more independent argument would compare the loss of jobs and the loss of tax income (it would be nice to see some elasticities) against the benefits of having less smoking.
The argument Yushchenko makes apply to any tax increase and in fact, could be used to argue that the taxes on cigarettes (and other products) should be decreased to zero.
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