On the cost of smoking

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10809145

Around 2007 I did some back-of-the-envelope sums to work out the total value of excise tax on tobacco versus the additional cost of public healthcare the smokers are likely to consume. The result surprised me. From my simple check it looked like the tax collected covered the extra healthcare expenses. This conclusion ran contrary to the media mantra that “smokers cost us all money”.

The recent Treasury report had a both wider and more detailed scope. It included the assessment of the superannuation payments and aged care (both funded from the budget) which the smokers forego due to dying earlier than other citizens. The report concluded that, in a fiscal sense, smoking saves the Government money.

The report had been commissioned to provide the Government with advice in the run-up to the recently announced new budget. One would have thought that, faced with the new evidence, the Government would defer any proposed increases to the tobacco excise tax (these increases had historically been based on the, now disproved, meme that “smokers cost us money”). Not so – as announced in the budget, the excise tax will go up by 10% every year for the next four years.

This smacks of anti-smokers discrimination. More importantly – in these times of hardship, why penalise people for indulging in a habit likely to save us money?

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