No more 'sin' taxes, please

Last updated 10:16 19/02/2010

Cigarettes have many uses. I was gagging for a fag at last month's Al Green concert. As the organ-heavy riff of Love & Happiness brought Green's sacred sounds to the secular church of Auckland's Civic Theatre, noxious vapours rose from the crowd. A couple of durries would have masked the overpowering body odour.

Actually, several people did light up, but they were only smoking cannabis, and nobody seemed to mind. If they had been inhaling the legal drug, tobacco, there would have been a hue and cry.

Many non-smokers seem surprisingly tolerant and even partake of the odd joint, but fulminate at the merest whiff of tobacco fumes.

Now anti-smoking campaigners want ciggies banned in public places, although Prime Minister John Key says such a move would represent "nanny state" intrusiveness. But as the Government mulls over the means to fund cuts to personal rates, you can be sure so-called sin taxes will be part of the mix.

Its coalition partner, the Maori Party, is pushing for price rises, which will hurt many of its poor constituency, the same people it is promising to protect from an expected increase in GST.

The Smokefree Coalition also wants steep price rises and the price indexed to inflation.

This is often justified by the cost to the health system of treating smokers. This is, of course, poppycock. Smokers actually subsidise the health system and are treated as pariahs for their trouble.

In 1999-2000, smokers paid $950 million in excise, according to Treasury's 2001 Tax Review, and it is now more than $1.1 billion. Treatment, by comparison, is estimated at $225m.

About 70 per cent of the price of tobacco is tax. When I was a heavy smoker, I contributed $112 a week to the Government.

Today, my extra weekly tax burden is about $63. I would have to lie in a public hospital bed for five years and, even then, I would still be in healthcare credit.

Treasury is scathing about government gouging of the quarter of the population who smoke.

"Present levels of taxation appear indefensible on externality grounds, even if the social spending argument were accepted," it says.

"If excess health costs are to be selectively recovered from smokers or drinkers, savings in other areas of social spending, such as New Zealand Superannuation, should also be taken into account."

It's a good point. Smokers die younger, representing a considerable saving, while non-smokers linger on at a cost to the taxpayer.

Eric Crampton, a non-smoking senior economics lecturer at the University of Canterbury, says estimates of the cost of smoking are greatly inflated by including the cost of cigarette production.

"You cannot honestly have a net measure on the benefit side and then double-count by including the resource on the cost side. Similarly, we cannot count the healthcare costs on the cost side, if we do not include the tax revenues collected on the benefits side."

Treasury says the Ministry of Health and anti-smoking groups ignore "the long average lag between the payment of tobacco taxes and the incidence of health costs".

Crampton: "The cost-benefit analysis presented is fundamentally unsound [and] its methods seem to have been chosen with the aim of maximising the monetised costs of tobacco use and minimising the monetised value of the [enjoyment] derived by smokers from tobacco."

Pleasure is obtained by smoking, I assure you. It goes perfectly with three of life's best pastimes: eating, drinking and sex.

When the deed is done, even during it, there is nothing better than placing a crisp filter between one's lips and savouring the intoxication of a craving fulfilled.

Esquire magazine's fiction editor, Rust Hills, complained that "most advice you get about smoking and drinking comes from the wrong people. Their solution is worse than your problem."

Crampton would agree. His recommendation is to expunge the entire cost-benefit analysis from the Smokefree report, replaced with the "honest, albeit contestable, assertion that the authors know better what's good for smokers than smokers themselves".

An increase in tobacco excise is not certain but, as Treasury notes, this tax is neither efficient nor equitable. Smoking rates are higher among poorer groups and these people are unfairly punished by increases in the cost of tobacco.

Many smokers forego essential purchases to feed their addiction. An increase in GST, however, is a given. Smokers should not have to pay twice because of the perceived immorality of their addiction. We pay far more than our fair share.

Post a comment
Adulcia   #1   10:39 am Feb 19 2010

Correct me if I'm wrong, but I think the tax on tobacco and alcohol go back into ancient history before they were regarded and unhealthy practices. I think the reasoning in the 1800's was more that they were luxury items, but popular enough to be able to generate decent revenue for the government.

Random   #2   10:40 am Feb 19 2010

Ironically the ever increasing excise tax on alcohol has created the "pre loading" drinking culture that exists today, it's just too expensive to drink in town. It's also largely to blame, whether or not people like it, for shrinking crowd numbers at sporting events. Prohibitionists never think of the whole picture.

paul   #3   10:56 am Feb 19 2010

Junk food should be taxed at the same rate as cigarettes (70%) a 70% increse in the cost of your McDonalds would certainly help with the rising cost of obesity treatment in this country. And maybe it would stop people shovelling that shi* into themselves.

Ol' smokey   #4   11:49 am Feb 19 2010

We need a government that grows a pair and bans smoking outright. Taxing doesn’t work, neither does TV campaigns, warnings, pictures of rotten lungs, etc. They just keep smoking, and disturbingly more young people are picking the habit/addiction up. Must be time for the ‘big-stick approach’.

MattyH   #5   11:52 am Feb 19 2010

Being a bit of a numbers geek, I notice that the claim is that the cost of a packet of ciggies is 70% tax. So to align Fast Food with Ciggies, then the tax on the food should be 235%. Thats in addition to the current cost.

So your $10 hunger buster meal at Burger King would go from $10 to a massive $33.30. Now that really would stop you buying the junk food, wouldn't it?

Nathan   #6   11:55 am Feb 19 2010

You forget that it is an unhealthy addiction with little purpose(other than mild neural stimulation which can be achieved alternatively with a patch from the chemist). You have overlooked other costs; anti-smoking advertising, litter, health danger from second-hand smoke, fires(house & forest) - deaths. Also weed smokers are tollerated because it serves a purpose.

Ken   #7   11:58 am Feb 19 2010

I say bring on more increases in tax on both cigarettes, smoking paraphernalia of any kind and alcohol. Life is about the choices you make and society at large is against smoking. If you chose to smoke then you pay the price of that choice. Prior to current smoking bans I would not go out to restaurants or bars due to the contamination of these venues by smokers. Now I frequent them more often as it's a much more enjoyable and sociable experience in a smokefree environment. Poor people can't afford to smoke, the fact they do just shows that they're stupid so I have no sympathy for anyone who continues to smoke who complains about the tax. Your choice, stiff cheese. Alcohol we purchase with our groceries, beer and wine. We have beer maybe twice a week and the same with a wine. Beer and wine is a luxury to me and I savour it occasionally. Anyone who drinks them daily and more than one is an alcoholic in my book. Again you pay the price in $ and damage to yourself by the choices you make.

Response Ability   #8   12:02 pm Feb 19 2010

Random #2 Are you saying that sporting events are only fun when you're smashed/drunk/tipsy? That's a long bow to draw. Personally, I think that sporting events are becoming less popular, because other forms of entertainment are becoming more popular.

Nick Tobacco is very addictive, and does cause health problems which can lead to a very unhappy old age in a reasonable number of people. This doesn't happen for everyone who smokes, but it does happen for a lot of them. I think if we discourage smoking and encourage other forms of entertainment, we can keep people as happy (or almost) for longer.

Paying the tax is 100% your choice, whinging because a luxury is expensive doesn't draw much sympathy from me I'm afraid.


Simon   #9   12:05 pm Feb 19 2010

I'm by no means a fervent anti-smoking campaigner, but I do find it funny that you say smoking goes well with eating, drinking and sex. For one it diminishes your ability to taste & smell (thereby reducing the pleasure you get from food & drink), and secondly it's associated with heart disease, lung problems and erectile dysfunction. So really, perhaps it's not the best combo with any of those...

Monument   #10   12:09 pm Feb 19 2010

I am happy for smokers to fag up as much as they want, as long as they do it in the confines of a box so that I don't have to smell it. Another annoying thing you find with smokers, that grinds my gears, is their belief that they have a god given right to litter the ground with cigarette butts. They put their rubbish in a bin but casually flick their butts anywhere they choose.

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