-Unknown present day tobacco farmer
In my american studies class yesterday we looked at the quote above and thought about this tobacco farmer's statement. It is true that tobacco cultivation has been around long before our country had established a government, yet there is such a large tax now on cigarettes put into effect by the government. In fact, President Obama "Has proposed a 94-cent-per-pack increase to the federal excise tax".
Smoking is the number one cause of preventable deaths, yet people are still willing to spend so much money and risk their lives just to get their "fix". In this blog post I would like to look at how much it costs to produce a pack of cigarettes, the tax on a pack of cigarettes in Illinois (the tax varies state to state), and the profit margin that cigarette companies gain . Since the company Marlboro (made by Philip Morris) accounts for almost 50% of the total cigarette market, I thought they would be a good company to analyze.
In general to produce one pack of cigarettes before taxes in 2002, Health Canada found that it costs 98 cents per pack (Adjusted for US dollars) in 2002, which includes all the production, labor, purchasing of tobacco etc... Yet these products are being sold for over 10 times their production cost (which includes taxes).
I called my local Walgreens and found that one pack of marlboro cigarettes costs $10.25. $4.66 of that is strictly taxes. That my friend is a lot of money to spend on something that will last you maybe a day or so.
If you're wondering how much Marlboro profits, their operating margin is 30% despite all the taxes, which makes them the 2nd most profitable product in America.
If you're a smoker, maybe next time you think about smoking a cigarette, you'll think about spending that hard earned money somewhere else.
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