The federal tax on tobacco products, and particularly on cigarettes, has been the subject of considerable debate in both the United States House of Representatives and Senate. Currently, the proposed new tax rate is $1.00 per package, an increase of 61 cents. The current federal tax on a single pack of cigarettes is 39 cents (Tobacco Free Kids, 2007). Congress last passed a 15-cent cigarette tax increase in 1997. This tax took effect in January 2000 at 10 cents and the additional 5 cents followed in January 2002. This is a selective excise tax. The first federal cigarette tax occurred in 1960. The amount was 8 cents while the cost of a pack of cigarettes cost 28 cents. The tax represented a third of the price paid by consumers. Currently, the average price of a pack of cigarettes is $4, with the 39-cent tax accounting for 10 percent of the cost. To return to the 1960 rate of 31 percent, the federal tax would require an increase of 94 cents per package. Additionally, the federal cigarette tax has not kept up with the consumer price index. For the government to change this situation, the proposed tax increase would have to be $1.12 per package. In contrast, the tax on cigarettes in foreign countries ranges from over $2.00 to almost $10.00 per pack. The expected benefits of an increase in the tax would be $9.4 billion in additional revenue, lower cigarette sales and fewer sales to youth. "The general consensus is that each 10 percent increase in the real price of cigarettes reduces overall cigarette consumption by about three to five percent, reduces the number of young adult smokers by 3.5 percent, and reduces the number of 'children who smoke from six or six. seven percent. (Tobacco Free Kids.org, 2007) Middle of paper......pipes who cannot afford them at this price will be forced to quit smoking, which in turn will reduce their health care prospects . costs in our country.ReferencesCampaign for tobacco-free children. (2007). Higher taxes on cigarettes reduce smoking, save lives and save money. Retrieved January 27, 2008 from http://tobaccofreekids.org/reports/prices/Entin, Stephen. J. (2004). Tax incidence, tax burden and tax transfer: who actually pays the tax? Retrieved January 24, 2008 from http://www.heritage.org/research/taxes/cda04-12.cfmFleenor, Patrick. (2007). SCHIP, Cigarette Taxes and Crime. Retrieved January 27, 2008, from http://www.taxfoundation.org/blog/show/22484.htmlSparkNotes LLC. (2006). Balance: government intervention in markets. Retrieved January 27, 2008 from http://www.sparknotes.com/economys/micro/supplydemand/equilibrium/section2.rhtml