Final answer:
Studies reveal that second-hand smoke is carcinogenic, leading governments to tax cigarettes both for revenue and to discourage smoking. These tobacco taxes aim to balance the health benefits of reduced smoking against the financial government gains from the tax.
Step-by-step explanation:
Numerous studies have demonstrated that second-hand cigarette smoke is harmful to health, showing that it is carcinogenic and can significantly increase the risk of lung cancer and other health issues in nonsmokers. Exposure to second-hand smoke is especially detrimental to children, leading to a higher incidence of respiratory infections, ear infections, asthma, and even an increased risk of sudden infant death syndrome (SIDS). In response, governments have implemented taxes on cigarettes to achieve two main objectives: to raise tax revenue and to discourage cigarette consumption, though such measures have had varying degrees of success on consumer behavior.
Tobacco tax policies must consider the elasticity of demand for cigarettes. If a higher tax on cigarettes significantly reduces consumption, it will not generate much revenue but will achieve the goal of reducing smoking rates. Conversely, if the tax does not deter smokers due to the highly addictive nature of nicotine, it will generate more revenue but may not decrease consumption as intended.