One of the concerns that governments raise is the regressive nature of taxes on poor smokers. As the tax increases, the share of tobacco expenditure on household income also increases, creating an extra burden on a family budget, and especially on poorer smokers. This argument holds for all goods and services. For tobacco products that are harmful to health, the regressivity counter-argument can be made by looking at the benefits and costs of a tax increase beyond the impact on family income. Evidence suggests that the poor are more sensitive to price increases, so as a result it is expected that as the tax increases, the majority of them will more likely reduce or quit smoking. In respect to poor smokers, their families and the society at large, the benefits of quitting are enormous because there will be lower health costs and more resources for other essential goods such as food and education. Moreover, governments could allocate the extra revenues generated by higher tobacco taxes to social programmes that benefit the poor such as affordable and accessible health services, health insurance and smoking cessation programmes (WHO technical manual on tobacco tax administration, 2010).
In order to address the economic arguments used against tobacco control, it is necessary to strengthen the evidence and the technical and analytical skills of government officials, academia and civil society. This will help move forward the tobacco control agenda and improve both the economy and public health.
http://www.who.int/tobacco/economics/background/en/index3.html