Does Increasing Taxes Reduce Smoking?

In recent months, there has been a renewed initiative by most governments to make it costlier to light up a cigarette. In Australia, not only has excise duties increased, cigarettes can only be sold at designated areas and, since December 2011, they have to come in plain packaging, forcing all cigarette manufacturers to present their goods in khaki boxes with shrunken logos and a graphic health message.

The argument whether increasing taxes do significantly reduce the incidence of smoking has been with us for ages. Some have not been convinced, but irrefutable data has just been released  which showed that in the US, when President Obama signed the tax hike — the biggest to take effect in his first term — on his 16th day in office, reversing two vetoes by the previous President Bush (causing the federal cigarette tax to jump from 39 cents to $1.01 per pack on April 1, 2009) the net result was, as reported by USA Today, a historic drop in smoking, especially among teens, poor people and those dependent on government health insurance.

Most impressively, about 3 million fewer people smoked last year than in 2009, despite a larger population, according to surveys by the Centers for Disease Control and Prevention.

These data are most certainly going to spur more countries to implement this form of social engineering via taxation, what with the economic recession resulting in declining revenues for the tax-man.

Counterfeits and black-markets account for one-quarter of cigarette sales in the UK,Australia and Malaysia

However, while most of us acknowledge the health hazards of smoking, increasing taxes may lead to newer problems. Increased smuggling, tax evasion, counterfeiting are challenges that law enforcement agencies have to handle effectively so that the ultimate objective is achieved. The tendency for smokers to downgrade to cigars (not necessarily more cost-efficient!) or cheaper brands will not reduce the incidence of smoking. Hence the necessity of concurrent health education campaigns.

A unique print advert from Saudi Arabia

The last-mentioned is an often under-estimated weapon, particularly when the stand of most cigarette companies is “We don’t build our business on persuading people to smoke or trying to stop people from quitting. We believe that if you want to quit, you should.”

One response

  1. The figures for the drop in number of smokers in thevUS is impressive. Other nations should adopt the same strategy..up with taxes!

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