OK, deep breath here, I’m starting what oughta be a doozy (and, yes, I searched for similar threads first).
According to this article, governments may actually reap monetary benefit from the untimely deaths of smokers.
Further, it appears that taxes on tobacco disproportionally hit the poor:
Now, here’s the debate: Are the “Cost Benefits” real? If the cost benefits are real, should the Gov’t stop/reduce taxing on tobacco products?
Let me kick it off:
If the study is accurate, and given the current social standards and laws exiling smokers to designated smoking areas, and barring smoke in public buildings, on long flights, and so on, I’m thinking that heavy taxes are redundant and cynical.
OTOH, health insurance for smokers with children and non-smoking spouses ought to come at a premium, as they’re much more likely to damage the health of their family members.
Am I wrong? Have the anti-smoking forces been missing a big factor? Mind you, I’m all for no one suffering a horrible death from various smoking related causes, but if they’re making an informed decision to take the risk, should it be the govt’s responsibility to save smokers from themseves? (And yes, I’m cool with prohibiting marketing cigarettes to minors and prohibiting nicotine manipulation) There has to more to this that meets the eye.
This is actually a well-known “secret” in the health care actuarial field. Basically, a smoker has a higher proportion of working years to non-working years than a non-smoker, due to the age when smoking-related illnesses typically hit.
I don’t think it changes the government’s right to set taxes in a manner so as to encourage constructive behavior. But I do think it undercuts (or should) government lawsuits aimed at recovering “damages” from smoking.
I think the tax discriminates against the poor to the extent that it is harmful. But to the extent that the tax is viewed as a benefit, it is helpful to the poor. More so than to the rich in fact, as the poor are more likely to modify their behavior as a result of a cigarette tax than the rich are.
I hate to sound heartless, but who really cares if the tobacco tax is borne primarily by the poor? That’s a mischaracterization anyway, as the tax isn’t borne by “the poor” – it’s borne by smokers who happen to be poor. As such, there is an obvious and simple way to avoid paying it.
First: Cut the taxes, by all means. I always figured it was lies, propoganda, and a money-grubbin’ ploy.
However, I take issue with the statement “those who pay are for the most part people on the lower end of the economic spectrum who can least afford it.”
What kind of conclusion is this? It has nothing to do with the group studied. Those who pay are the people who use the tobacco. They pay 100% of these taxes. Now, if you want to examine some statistics regarding who is smoking, that’s one thing. But, those who smoke more pay more. It has nothing to do with how much money the smoker takes home.
I am not a statistician, but I suspect that, given the study done, the statement given above is pretty meaningless. Unless Time is suggesting that you submit your last pay stub before buying a pack of butts, so you can pay in accordance with your tax bracket.
I read that as being that as long as the price increases are incremental, smokers will keep on buying. Raise the prices dramatically, and there’s likely to be voter consequences, as a block of several score millions of angry smokers vote as one against the sudden price increase.
Also, past a certain price level, smuggling will just kick into high gear.
Actually, perhaps both statements are correct? The poor can least afford to smoke, but also pay for their chosen vice? Still, I’m thinking it’d be a lot less cynical (and more fair) to lower the taxes on tobacco products, as it appears (at least for now) that the money collected is out of line with the realistic costs, and appears to be used for things other than strictly tobacco costs. Perhaps taxes should be lowered to match the actual costs? (Yeah, right, like politicians will give up a revenue stream. NOT!)
Why? Tobacco and liquor, for example, were taxed long before the government was paying through health coverage for the harms caused by them. “Vice” taxes have always made sense as a revenue stream, in that (ignoring addiction for the moment), they are essentially voluntary. Hell, we have a luxury tax on autos that cost over a certain amount, the revenue stream from which I’m sure far exceeds any additional cost in car accidents, etc., caused by luxury cars.
Point, but consider that most such vice and luxury taxes (with the exception of liquor and tobacco) are paid disproportionately by the wealthier segments of society. I’m not saying to eliminate them, but to lower them back to the proportionate levels that existed before it became fashionable to jack-up the tax under the pretext that it was to pay for health costs.
They’re also jacked up to pay for public works projects. Jacobs Field and Gund Arena in Cleveland were built in part with “sin tax” money, as was Browns Stadium. And, again, there’s a really, really easy way to avoid paying it at all.
While the study was for the Czech Republic, which, IIRC, supports more of the population directly through housing subsidies, pensions, etc. Perhaps we would see different numbers in the U.S.
Related to that is the tendency for the tobacco companies to provide the armed forces with low cost cigarettes, and for those same armed forces to encourage smoking. I’ve read (but no cites - bad epeepunk) that sentries were encouraged to smoke to stay alert. And don’t forget the “smoke 'em if you’ve got 'em” breaks.
So a realistic, balanced, fair assesment of the costs related to smoking that would lead to an fair tax would be a real boon. And a political boondoggle, because who wants to go on record as saying that smoking isn’t all that bad, except Jesse Helms. But the tax should only be used for smoking cessation programs, and not public projects.
IIRC, there was a report on the radio which mentioned, fleetingly, that these reports of overall economic benefit of early death of smokers (versus protracted illness and hospitalization cost) was just so much Tobacco sponsored propagandist BS after all. However, I have no definitive cite for this. Anyone else here this?
IMO, the economics probably would bear out if you just let any smoker who got sick die, instead of treating them, but this could be viewed as some as a bit heartless.
Economically sales taxes are best for items such as cigarettes with great price elasticity. This is because the cost of the tax will effect productivity much less than taxes on items with less price elasticity. So from a macroeconomic perspective cigarettes are good items to tax, if you discount the black market factor.
People who die from smoking don’t just drop dead - many of them die slowly and painfully of some nasty ailment, during which time they can run up medical bills in the 5-6 digit range, which can easily offset any savings from early death. I wouldn’t be at all surprised if it was discovered that Philip Morris conveniently left this out of their math.
Actually, yes they do … heart attacks is the most common form of death for smokers.
If you let anyone who got sick just die, instead of treating them, there would be a lot less medical costs. The point is, older people incur exponentially more illnesses than younger people, and smokers usually don’t live to become older people, therefore, smokers incur less medical costs than non-smokers. It’s common sense.
Also, for the record, i’m a non-smoker, and i think “sin taxes”, without cause, are stupid and immoral.
From my days as an Economics grad student (about 5 years ago) I seem to recall several studies that came to the conclusion that the econimic cost/benefit showed that smokers are net contributors to the coffers of the governement(so to speak) through taxation vis a vis health benefits paid.
However, I am not sure that these studies would take into account the lost productivity of smokers, more sick days as well as the fact that they seem to take 5 minute breaks every hour. Also I am not sure if they take into account the increased costs borne by the individual. I am sorry I have no cites for any of these, just my vague revollections.
Of course, the terms “cost” and “benefit” are loaded terms. Certianly you can do a strict dollar calculation. But in strictly academic economic terms cost and benefit are more related to welfare (not Welfare), in which dollars are just a proxy. There are tons of issues in this case: externality costs, property rights, quality of life versus length of life, transaction costs, etc.
My WAG is that these studies deal mostly with the kind-of strict accounting (dollar) analysis.