Many ancient civilizations – such as the Babylonians, the Indians, and the Chinese – burnt incense during religious rituals. Smoking in the Americas probably had its origins in the incense-burning ceremonies of shamans but was later adopted for pleasure or as a social tool. The smoking of tobacco and various hallucinogenic drugs was used to achieve trances and to come into contact with the spirit world. Also, to stimulate respiration, tobacco smoke enemas were used.Eastern North American tribes would carry large amounts of tobacco in pouches as a readily accepted trade item and would often smoke it in ceremonial pipes, either in sacred ceremonies or to seal bargains. Adults as well as children enjoyed the practice. It was believed that tobacco was a gift from the Creator and that the exhaled tobacco smoke was capable of carrying ones thoughts and prayers to heaven.Apart from smoking, tobacco had uses as medicine. As a pain killer it was used for earache and toothache and occasionally as a poultice. Smoking was said by the desert Indians to be a cure for colds, especially if the tobacco was mixed with the leaves of the small Desert sage, Salvia dorrii, or the root of Indian balsam or cough root, Leptotaenia multifida, the addition of which was thought to be particularly good for asthma and tuberculosis. Popularization
In 1612, six years after the settlement of Jamestown, Virginia, John Rolfe was credited as the first settler to successfully raise tobacco as a cash crop.
Smoking is often cited as an example of an inelastic good, however, i.e. a large rise in price will only result in a small decrease in consumption. Many nations have implemented some form of tobacco taxation. As of 1997, Denmark had the highest cigarette tax burden of $4.02 per pack. Taiwan only had a tax burden of $0.62 per pack. The federal government of the United States charges $1.01 per pack.Cigarette taxes vary widely from state to state in the United States. For example, Missouri has a cigarette tax of only 17 cents per pack, the nations lowest, while New York has the highest cigarette tax in the U.S.: $4.35 per pack. In Alabama, Illinois, Missouri, New York City, Tennessee, and Virginia, counties and cities may impose an additional limited tax on the price of cigarettes. Sales taxes are also levied on tobacco products in most jurisdictions. In the United Kingdom, a packet of 20 cigarettes has a tax added of 16.5% of the retail price plus £4.90. The UK has a significant black market for tobacco, and it has been estimated by the tobacco industry that 27% of cigarette and 68% of handrolling tobacco consumption is non-UK duty paid (NUKDP).In Australia total taxes account for 62.5% of the final price of a packet of cigarettes (2011 figures). These taxes include federal excise or customs duty and Goods and Services Tax.