In: Economics
a) With increase in excise duty on cigarette the government tax revenue will significantly increase. Since the demand for cigarette is inelastic the increase in the change in the price due to increase in excise duty will not affect its demand much thus augmenting the government's tax revenue due to increased excise duty on cigarette.
Illustration - If the demand for cigarettes is 100 packets and the price per packet is 10 units. The excise tax duty is increased by 2 units due to the new regulation of the government as a result now the price of a packet of cigarette is 12 units, since the demand of cigarette is inelastic it will not change proportionately with the increase in price and will continue to be 100 packets. The increase in the excise duty collected by the sale of cigarette will be 2 * 100 = 200 units. And this 200 units will be used for Healthcare
b) The cigarette entrepreneurs are making greater contribution to BPJS Health. Since the excise duty earned on cigarettes is spent on the Public healthcare expenditure and when the excise duty on cigarette whose demand is inelastic ,increases it will increase the resources available to spend on public expenditure. While the tax revenue earned from other business entities is spent by the government on various other avenues and not specifically health, thus making the cigarette entrepreneur a relatively greater contributor in funding the public healthcare expenditure. Not be mistaken the cigarette entrepreneur is having a greater contribution to funding healthcare expenditure through the excise duty it pays to the government and is not directly a greater contributor t the health of individuals in fact it is quite the contrary.
c) Due to increase in the excise duty on cigarettes the govt revenue collected to fund the public healthcare expenditure will increase thus more funding will be available for public healthcare expenditure nd greater funds can ensure better public healthcare service and infrastructure thus benefiting the public with improved service and healthcare infrastructure.