The government should increase taxes on alcohol and tobacco to help pay for the rising medical costs related to abuse of the aforementioned substances. This is an indispensable aspect within the country since it deals with the wellbeing of the population. Consumption of alcohol as well as first hand and second-hand smoking is proving risky to people’s health. The chief upshot is the burden associated with medical treatment of alcohol and tobacco users. Consequently, federal and state governments have embarked on measures to control mean consumption of alcohol and tobacco via restrictions and taxes (Grossman, Sindelar, Mullahy & Anderson, 1993). However, the current alcohol and tobacco tax rates are very low thus rendering the extent of abuse to remain high (Evans, Ringel & Stech, 1999). Hence, the heated discussion is whether taxes on alcohol and tobacco should be increased to maintain a balance between medical burden and tax revenues.