GCSE & Unit 1: Smoking, tax and elasticity of demand

Check out this recent article in 7 Days highlighting the inelastic demand for cigarettes. How would you reduce smoking in Dubai?

Proposals to double the price of cigarettes in the UAE may not be enough to make people kick the habit.


The UAE is considering imposing a health tax on cigarettes that would see a 100 per cent price rise on a packet.

Smokers told 7DAYS that if proposals to double the price of cigarettes, which are being considered by the government, were given the go-ahead it would not put them off lighting up. Shamsuden Mukhtar, who has been a smoker for 25 years, said: “Cigarette smoking is an addiction and people with a stable income would be more than willing to pay any amount to have a smoke. The best way to deal with it is to enrol people into programmes to help them quit.”

However, tobacco dealers said they were worried about the business impact on the new proposal so they would consider absorbing a percentage of the new tax to maintain sales.

“Previously, any additional costs have been transferred to the consumer. But in the event where we feel that extra costs are threatening the flow of business, we would explore options of absorbing some of the additional costs in order to keep our business running,” said a cigarette importer in Dubai. However Head of the Tobacco Control Committee, Dr Wedad Al Maidor, is optimistic a severe price hike would work.

“Experience shows that the best way to force people to quit smoking is by making cigarettes more expensive for them,” she said.