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Cigarette excise tax urged to raise prices, repel teens

The most effective way to ensure cigarette makers raise their prices, and in turn discourage teen smoking, is to tax cigarettes, according to a congressional economic analysis.

The Congressional Research Service analysis, released Wednesday, concludes that the proposed national tobacco deal may not force cigarette makers to increase prices enough to reduce teenage smoking and may even allow cigarette makers as profitable as Philip Morris not to raise prices at all."For a firm that is maximizing profits, there is no reason to expect that a lump-sum payment will have any effect on price or quantity," the analysis said. "The most effective (and certain) way to effect a price increase is to use an excise tax."