why i support the labor government’s tobacco excise
Image: Tomasz Sienicki
As I’m sure many of you are aware by now, the Labor government has proposed a tobacco excise – one that will raise the price of tobacco by 12.5% each year for four years. The backlash to this has been full of vitriol (my personal favourite is the one published here that compares the current Government’s attitude to health to that of Hitler’s).
I just don’t get why people are knicker-knotting all over the place.
Smoking is one of the leading causes of preventable death. It kills a whopping 15,000 people a year. It causes a multitude of health problems, and were it a product that didn’t have the lobby groups (and money) behind it that it does, it would have been made illegal a long time ago. As Andrew Leigh said in The Canberra Times, ‘No other legal product – when consumed as directed – ends up killing half its users’.
The argument against this tax is that this is not a nanny-state; that people are perfectly entitled to do what they want as long as it doesn’t hurt others, and the government should stick its nose out of its citizens’ personal business – which would be a convincing argument if smoking actually fell into the category of ‘doesn’t hurt others’. While many non-smokers get outraged about the cost of smoking, or rather the cost of the health complications that arise from smoking, to the taxpayer, I am lax to get behind this argument. We can all be a bit irresponsible with our health and I like to think that the tax I pay goes towards the roads, schools, hospitals and medical care that I enjoy as part of a functioning society.
I am not against smoking for economic reasons, even if that it is the sole reason the government has proposed the tax (though call me naïve but I like to think the government cares about our health). I am against it because the impact of tobacco spreads far beyond the smoker herself. Smoking, or rather, the health detriments of smoking, also affects the family and friends of the smoker.
Last year, at age 53, my father was diagnosed with Stage 3 prostate cancer. Luckily radiation seemed to do the trick, but in those months of uncertainty my family was a wreck. I have also seen my step-grandmother die painfully due to liver cancer. Unless you experience the impacts of this disease for yourself, there is no way to know just how heartbreaking it can be. So if you have the option of preventing, or at least limiting your chances of going through the ordeal that cancer is, then I say grab it with both hands and don’t let go.
I understand that it is not that easy. Smoking is addictive, and after seeing my mother try and fail to give up multiple times, it is not a simple matter of “willpower”. A lot of external support needs to be given – both in the form of family, friends and the medical profession.
But raising the tax on tobacco also helps people to kick the habit. Since a tax on tobacco was introduced in 1977, the percentage of adults who smoke on a daily basis has gone from 37 to 16 percent. Or for more conclusive evidence, since the excise in tobacco was introduced in 2010, consumption has dropped by around 11 percent.
It’s not rocket science: when smoking is less affordable, less people can afford to keep or take up the habit.
The Cancer Council has estimated that this tax will prevent up to 100,000 premature deaths. And if this tax saves only one person’s life, as I’m sure that it will, then that is enough of a benefit for me to be behind this tax one hundred percent.
(As a sidenote, I would also like to make the point that Labor stopped taking donations from tobacco companies nearly a decade ago, while the Liberals are still accepting the money. Just a little pre-election trivia for you.)
It’s not rocket science: when smoking is less affordable, less people can afford to keep or take up the habit.
On the other hand, instead of stopping smoking because of higher costs many smokers may simply choose to get cigarettes from illegal distributors because of the obvious advantages – price and otherwise: and government will get *no* benefit from tax at all for that. The connection is not as obvious or simple as you may wish to make out.
This oft-repeated claim deserves scrutiny. Can you identify a ‘tipping point’ at which the cost of cigarettes is so high that it is preferential to purchase illegal ones? Or any related academic literature or research?
Most illegal drugs are quite cheap to manufacture, but the high costs of illegally cultivating, smuggling or dealing narcotics mean that they have to make a large enough margin on each sale to sustain all the elements of the criminal operation.
In short, the Govt would have to charge *a lot* in order to get to the point where illegal cigarettes would be cheaper.
But even then, I’d wager that most people would prefer to pay an extra $3-5 a packet rather than take on the risks of being arrested and getting a criminal record.
Many of those costs you identify in the production and sale of illegal tobacco products are also costs in the production and sale of legal tobacco products. The major difference between the two is the added costs, from taxes and regulation, on legal tobacco.
This sort of thing has happened: in the past decade in the UK illegal drugs became cheaper than alcohol because of regulation.
Given the patronising attitude that has been encouraged towards smokers over the past few decades – by both government and non-government anti-smoking groups – many smokers may well decide, stuff the government, and get their cigarettes elsewhere.
“In the past decade in the UK illegal drugs became cheaper than alcohol” – but we’re not comparing different drugs, we’re talking about one particular drug – tobacco.
“The major difference between the two is the added costs, from taxes and regulation, on legal tobacco.”
You don’t think there’s any added costs from financing the transport of illegal narcotics? The drug mules, muscle, corrupt customs officials and fence would all work for free? Or at least, for less then the total cost of taxes and regulation of legal tobacco?
Or perhaps the illegal tobacco gangs wouldn’t need a sophisticated transport network, because the gangs are growing huge quantities of tobacco in their sheds, or in some (necessarily vast) secret fields in rural Victoria?
“Given the patronising attitude… many smokers may well decide [to] get their cigarettes elsewhere” –
that doesn’t explain *how* they’re going to achieve this. They “may well decide to” and then come up against the logistical challenges outlined above. How do they address those challenges?
I don’t know where they’d go Chris, but last year George Brandis ‘said figures showed the illicit tobacco trade in Australia last year [2011] was worth an estimated $1 billion in foregone tobacco excises’. One billion bucks! Somebody somewhere has got to be buying the stuff.
You also gloss over the fact that those involved in the production of *legal* tobacco don’t work for free either: and it’s not just the final products – cigarettes or cigars – that are highly regulated and taxed: other parts of the production chain are highly regulated and taxed too; government adds costs all the way down the production line.
I agree with you 100%.
If smokers want to complain about the cost of a pack of cigarettes, they’re entitled to do so, but I bet that if they saw the amount which (preventable) cancers and other detriments to their health cost the taxpayer, hospitals and the state, I hope they’d think twice.
George Brandis “said figures showed the illicit tobacco trade in Australia last year [2011] was worth an estimated $1 billion in foregone tobacco excises.”
So Brandis makes a claim that essentially backs up the Govt’s assertion that the policy isn’t about raising money (through tobacco excise) but reducing smoking rates. Amusing.
Ultimately, however, the crux of your argument is that there would be no demonstrable decline in smoking rates through raising prices because people will just get illegal cigarettes and keep smoking anyway. (amiright?)
A great source on smoking rates (other than Brandis) is the Tobacco in Australia online resource ( http://www.tobaccoinaustralia.org.au/chapter-13-taxation/13-5-impact-of-price-increases-on-tobacco-consumpt ). It states:
“In line with the findings of price elasticity studies in numerous other countries, substantial real increases in the price of tobacco products in Australia have been followed by larger-than-usual declines in apparent and reported tobacco consumption.” (i took the footnote references out)
Hell, maybe it’s actually better for society overall if there were *only* illegal cigarettes. barely anyone would smoke!
I am not a smoker but I feel more excise should be on Alcohol as it effects more people than just the person consuming it.
Tobacco effects the user and (passive ) but Alcohol effects a broader range in deaths and maiming of innocent people through drink driving and abuse. Tobacco hurts the consumer. Alcohol hurts the bystanders.