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Italy’s Ineffective Program for Reducing Smoking Spillovers

In most systems for reducing pollution using an effluent fee, the government is directly involved as a fee collector. When the Italian government decided to implement an effluent fee system aimed at reducing secondhand smoke in restaurants, however, it put the restaurants at the center of enforcement efforts. If a customer lights up a cigarette in a smoke-free zone in a restaurant in Italy, its managers are legally bound to charge the violator a fine as part of the bill and to transmit the amount of the fine to the government.

Many restaurant owners have refused to participate in the government’s program. Some worry about losing customers they penalize. Others simply do not want to go to the trouble to collect the government’s fees without receiving compensation for the tax-collecting expenses they would incur. Consequently, the Italian government’s effluent-fee system so far has largely failed to reduce secondhand smoke in restaurants.

For Critical Analysis:

How might the Italian government redesign its effluent-fee system so that it more effectively cuts down on the spillover costs incurred by nonsmoking patrons of restaurants?