Thursday, 9 October 2008

Tobacco Tax Increase Hurts The Poor

A cigarette price increase to fund smoking prevention programs sounds like a good idea. . . . That is unless you're poor.
There currently is a call for a tobacco tax increase to be used to fund more smoking prevention initiatives. A proposed rise of 2.5¢ a cigarette would push a pack of 40s up another $1 and is hopefully going to reduce smoking by 2.6 per cent. This equates to about 50,000 less smokers and $400 million dollars in addition revenue. It sounds like a win-win situation by lowering the amount of smokers and providing more funds for anti-smoking campaigns. But there are some nasty holes in this strategy. Smoking costs the community $31 billion dollars every year which makes $400 million dollars seem a little insignificant . The real problem though is, who are the people who won't quit despite the price rise. For those who earn an average wage, it won’t matter too much but those who are less fortunate, it will hit hard ... very hard. Monetary penalties are biased and for people who have a good income, it offers little incentive to abide by whatever rules they are are penalised for. We see it intrenched in our society like parking fines, court fines, tax penalties etc. For example, if you are in court and can afford expensive legal representation, you have a greater chance of getting off. That leaves those who can’t afford to ‘buy’ off their conviction and are stuck with budget solicitors. What about speeding fines? If your in a hurry, why would a few hundred dollars worry you if you’re on your way to meeting where you could earn thousands of dollars? Being in a hurry to drop off the kids to your grandparents so you can make it in time to that part time cleaning job is not worth your week’s pay for a speeding fine. Monetary penalties are not relative to your wealth.
We all know smoking is wrong and those who smoke are evil, weak and decadent. Luckily we have someone to guides them away from their wicked ways. Addiction is just an excuse. -The ideology of government anti-smoking programs
Smokers are addicts. Very simple to understand but what’s harder to grasp are the levels of addiction and the addict's situation. A financially secure tobacco addict can simply keep smoking if their addiction is bad enough. But what if you can’t afford it? The calls for an increase in tobacco excise, like most policies regarding addiction, is based on wishful thinking. Addiction can cause those with less disposable income to act completely different to our expectations and when faced with price increases will often accommodate the increase by missing out on something else. Instead of fresh healthy food, they might buy cheaper alternatives. If they need new shoes for their kids, they might keep them wearing them for a few more months. The car needs new tires? That can wait until next year. Simply increasing the cost of something is a broad remedy to discourage use. We see it in the way a tighter monetary policy is used to control inflation. We see it with alcohol being priced out of the reach of heavy drinkers. It might achieve some of it’s intended outcomes but the cost to some is far greater. It is a lazy way to achieve results and requires some spin to get support.
"With rising costs in food, petrol and housing, tobacco is now relatively inexpensive'' -Quit executive director Fiona Sharkie
Relatively inexpensive! Smoking is about 10-20% of a household budget for low income earners, about the same as food. Increasing the price of tobacco will have a profound effect on these budgets and absurd comments from anti-smoking groups show they care very little for people but more for statistics and numbers. Like most drug related programs, financially challenged and the worst effected lose out by broad, disproportional strategies. Strategies that give great headlines and target the easily converted. Of course there is never an analyses of who doesn’t quit smoking and how it effects them but plenty of back slapping at the many who have been rescued from their evil ways. The call for proper analysis is raised every time a “price increase” strategy is put on the table but it gets approved very quickly to avoid full scrutiny.
"With tobacco costing the Australian community $31.5 billion every year, it is essential proven tobacco control strategies, including tax increase, are put into place as soon as possible ...'' -Quit executive director Fiona Sharkie
We have just seen “Alcopops” receive a huge tax increase in an effort to stem “binge drinking” of teenage girls. While it is generally taboo to criticise any effort to reduce smoking levels, alcohol strategies do face scrutiny. This latest “price increase” strategy for “Alcopops” has come under criticism for lack of research, not being effective and for disproportionately effecting the less fortunate compared to average wage earners. I wonder why those same people are basically ignored when it comes to tobacco.
[Article Bumped up from May]


Damian said...

Good post, mate. And while we're throwing all sorts of addictions into the discussion,let's also talk about pokies.

Ross Sharp said...

I'm a financially secure tobacco addict, and there have been times when, if I'm down to my last 12 bucks and it's 3 days before payday, 10 of those dollars buy the fags. I wish they'd just ban the damn things instead of all this farting about - I mean, honestly, do the powers that be really think that all the smokers are suddenly going to be hanging around dingy laneways in the dead of night hoping to score a contraband pack of Winfields for a fix?

phallacy said...

Since records were first tabulated after WWII, (see OZ Year Books or ABS)it has been a constant in household expenditure that alcohol & tobacco make up between 1/4 to a 1/3 of non capital expenditure, greater than food, clothing & entertainment combined.

David said...

Behind the apparent concern for the poor is a rather nasty patronising state of mind that arrogantly considers "the poor" (as if that means something definite) to be less in control of their desires, more driven by addictive illness than others in the community.

What superior moral set gives you the right to be so condescending to others who might be less wealthy? Who set you up as the God of the poor?

Terry Wright said...



I'm fucked if I know how you came to your conclusions but judging from your other post, it's obviously not from reading the articles.

David said...

I think I've read correctly. Behind the rhetoric is the assumption that the economically marginalised are less able to make rational economic decisions than others. That is the arrogance of the middle-classes.

I, for one, do not deny poor people their humanity. I refuse to patronise them with mis-placed concern.

What is the better macro policy: decrease tobacco excise, leave it unchanged, or increase it? If increasing it leads to fewer tobacco related deaths and less burden on tax-payers, then it has to be the best policy.

And what about the advantage of tobacco excise being an optional tax?

I refuse to pay it, and invite tobacco users to join me by simply giving up the habit. Ignore those social-welfare-state government funded health nazis, addiction is easier to control than they say. What are you, piss-weak?

Terry Wright said...

David: "I think I've read correctly. Behind the rhetoric is the assumption that the economically marginalised are less able to make rational economic decisions than others. That is the arrogance of the middle-classes."

Nope. Missed the point.

David said...

I think the difference is that you are seeing increased taxes as moralistic comment on people's drug using habits - but this is just an irrelevant sideshow.

The primary concern of the tax should be to recoup the financial burden on taxpayers who must subsidise treatment and other "social costs" of tobacco related illness. Asking tobacco users to contribute to this financial cost through an appropriate level of taxes seems most reasonable. Increasing the tax is also reasonable if it can help reduce the taxation burden of treatment. The moral tone in which these arguments are sometimes presented can be ignored.

I see you state that smoking is wrong - but the only way to arrive at that moral judgement is to look at the level of harm caused. The financial burden on other people must be considered, and I think becuase of the large health costs, trumps any individual concerns due to an individual's financial circumstances.

Why should the financial (and other) health of individual ever be more important than that of the group or society? Whose welfare is more important: a narrow group of financially disadvantage people, or society at large?

Terry Wright said...

Thanks David.

Boy, you're a real proponent for Game Theory. John Nash would be proud.

Financial penalties are biased. Most people can take the price rise in cigarettes but it does play on minds that they could be spending the money on something else. But many of them will still not quit simply because of a price rise as the addiction overrides the want to have extra money. They will continue to smoke but they will not go without the basics.

For those who are not as financial, the choice is similar but it is not about having less spare cash. It's about eating into their basic needs. This should be a strong incentive to quit and will encourage many to do so. But what about those who cannot quit and don't have the extra cash to play with?

You also assume that smokers cost the government and you money. In fact, tobacco tax brings in much more money than the cost of health care for smokers. As most of your second post is based on this assumption, it's probably best that I ignore it.

David: "I refuse to pay it, and invite tobacco users to join me by simply giving up the habit. Ignore those social-welfare-state government funded health nazis, addiction is easier to control than they say. What are you, piss-weak?"

LOL. Of course smoking is very easy to give up because no one ever gets addicted to it, do they. And heroin addiction? ... a piece of cake. Addiction doesn't really mean addiction in your books. They should redefine it as simply doing something that is bad for you. Easy fix, "Just Say No". That worked really well, didn't it.

I forgot that all addicts were piss weak. The physical attributes of chemical imbalances in the brain, the effect of over 500 genes and the damage from drugs on the frontal cortex are all just wished away with a bit of will power. mmmm, I think you have discovered the key to breaking addiction. So simple.

David said...

I'd also suggest to tobacco addicts like Ross to consider their addiction in a global context of social ills. Think about the people you know who have overcome much greater difficulties than a personal addiction. For example, I know a number of people who have survived the horrors of war, had their wealth wiped out by communists, migrated to Australia in a rickety boat, almost drowning on the way, arriving with poor English skills, gained tertiary qualifications in medical science and are now earning a better income than many average native-born Australians. And some of these people have gained a mastery of English that is superior to many native born Australians. These people would laugh at your struggle with tobacco addiction. Are you really saying you are of inferior quality compared to the people described above?

In the context of much greater social problems here in Australia (think of Indigenous health problems, child sexual abuse, starving old-age pensioners,...) could the tobacco addicts just deal with their problems by themselves, and pay the extra tax so these other, much greater evils, can be addressed first?

Anonymous said...

great post!