I saw the following sign at a gas station today:
It’s good to know the basic principles of microeconomics are still alive and well despite the crazy financial world.
As a refresher, no matter whether the government taxes the consumer or the producer, the tax burden will be split between the consumer and producer in a way that reflects the price elasticity of demand. I think we can guess how elastic the demand for cigarettes is, hence the buyer is paying most of the taxes.