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Do specific taxes really provide the result intended? In recent years, you probably have heard the argument that tobacco taxes should be raised in order to reduce smoking. Since smoking is bad for you, if you choose to smoke, society is going to make you pay for doing so by levying a greater burden on you through a stiff tobacco tax. What is the economic impact of imposing such a policy stance. In doing so, identify whether higher tobacco taxes really reduce the consumption of tobacco and make society better off. Or, do higher taxes just mean that people keep on smoking and spend more of their income on tobacco and less on other goods and services?
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