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The taxes on Cigarettes in Chicago are likely to rise in the coming months. The hike would push the combined tax on a pack of cigarettes to $6.67 in Chicago - the second-highest in the nation behind New York City at $6.86 - but would save some 10,300 Cook County residents from premature, smoking related deaths and trigger a 7.2 percent drop in young smokers, Preckwinkle said in the article. It is hoped that the increase in price for cigarettes will result in more and more people refraining from purchasing cigarettes, in an attempt to make people healthier, cut medical costs and make the city healthier. This is an example of VAT tax, or value added tax, on cigarettes.

The government wants to implement a one dollar raise in taxes on cigarettes, in order to ward consumers off them. The government is doing so to warn how dangerous and harmful cigarettes are.They want to discourage children and teens from smoking. Another reason for the tax raise of $1.98 is to help pay the state's rising cots for health care for the poor. There was a $2.7 billion shortage in the Medicaid funding, which needs to be recovered through collecting taxes. As cigarettes are quite inelastic, people will continue to buy them even if the price increases, as they are an addictive good and cannot be put down easily. Substitutes would not be an option in this case, as there is a tax added on other tobacco products as well.

In my article, the Swiss government has decided to increase the tax on cigarette packs by 20 centimes ($0.20). The government has also given manufacturers 3 months to 'adjust' their prices, which also implies that firms are being given time to increase their production (positive relationship between supply and prices). In this case, consumers will not be effected by a price change, as cigarettes are an addictive good. Cigarettes also have a very inelastic demand curve. 

The article Chicago's cigarette tax could approach New York's (by Megan Hickey) focused on the possibility of Chicago increasing taxes on cigarettes. There are several underlying reasons for the proposal; one being a $298 million budget shortage, the other to increase awareness of smoking for health purposes. Chicago already has the second highest tax on cigarettes in the US, the average cost for a pack being $10.25, after New York at $12.50. The total combined tax amount is $5.67 which is made up of a federal tax of $1.01, Cook County tax of $2, Illinois tax of $1.98 and a government tax of $0.68. The possibility of increasing this tax would lead to less consumption of the product, less revenue for tobacco companies and more deadweight loss for consumers and producers. However the Chicagoan government believes that the health benefits gained from less tobacco consumption are far greater than that of cost. To continue this tax hike (continued increase in the tax of cigarettes) would continue the trend of declining tobacco consumption and could decrease the youth in smoking by 7.2%. Not only would the state receive health benefits but the government would be able to increase their revenue through this tax hike.

In 2009 the federal government in the USA decided to raise the cigarette tax from 69 cents to 1.01 dollars which applies to all tobacco products. The tax increase was originally issued to fund a child insurance program but the law was vetoed by president Bush although the tax increase on tobacco products remained. Previous tax increases in the cigarette tax reduced consumption by 4%, however these were lower increases and it is predicted by the Office of Smoking and Health Center that 1 million of the 45 million smokers will quit.