Thursday, January 7, 2010

Punishing taxes on smokers

“There are plenty of weapons of persuasion, of restriction, of financial penalty by price and tax increases with which we could seriously hope to reduce the consumption of cigarettes by a substantial proportion within 5 years”

That quote comes from the 3rd World Conference on Smoking and Health held in New York in 1975 where anti-smoker advocates gathered to plan their crusade to eliminate smoking: “our target must be, in the long-term, the elimination of cigarette smoking.” The report stemming from the conference can only be described as an anti-smoker manifesto which has recently been referred to as the Godber Blueprint

The “weapons of persuasion” referred to in the statement include, of course, the draconian smoking bans and usurious levels of tobacco taxation the anti-smoker zealots pressured governments around the world into implementing. But, over the last few years, there has been growing evidence that smoking bans and government extortion in the form of penalizing tobacco taxes have not had the desired effect. In fact, many anti-smoking initiatives appear to be counterproductive.

For example, higher tobacco taxes are considered by the anti-smoker brigade to be the most effective way to reduce tobacco consumption, especially for young people and others with low incomes. According to Luke Clancy, Director General of the Irish Research Institute for a Tobacco Free Society, a new institute set up by the government to look at all aspects of research on tobacco control, it is “the most important intervention there is in tobacco control”.

Professor Clancy has also served two five years terms as chairman of Action on Smoking and Health (ASH) Ireland, which is among the more rabid anti-smoker groups. And, last month Clancy's anti-smoker bias was clearly evident in an article on Inside Ireland, when he took issue with the failure of the Irish government to increase the country's already punitive levels of tobacco taxes.

Ireland's Finance Minister, Brian Lenihan, indicated he would not increase the price of tobacco as it could lead to further growth in tobacco smuggling.

Clancy appears to recognize the scope of the problem: “Smuggling of tobacco into this country has now reached epidemic proportions and must be tackled head on by the government. Over 20% of cigarettes smoked in this country are non-duty paid in Ireland – so the loss in revenue to the exchequer is over €400 (million) euro per annum.”

But, he is not prepared to admit that outrageous tobacco taxes are the cause of the problem. And, even if they are, his solution is simply to crack down on smuggling.

In October, confronted with evidence that smoking prevalence in Ireland was at an eleven year high of 33%, despite high tobacco taxes and a smoking ban in pubs and restaurants, Clancy told the Independent: "There is no evidence of any decline in smoking in this survey, indicating a clear need for higher prices of cigarettes and better treatment of tobacco-dependence."

Clancy's position mimics that of others in the anti-smoker cult; smokers must be coerced into quitting, regardless of any other costs to society.

And, there are other costs. There is a substantial body of evidence suggesting that smuggling and the illegal tobacco trade are cutting into government revenues. And, there are additional costs to law enforcement budgets. At the same time, there is considerable damage to the the livelihoods of convenience store owners and tobacco retailers.

And, the problem is not confined to Ireland. The same problem is surfacing in Great Britain, Germany and, seemingly, the rest of the developed world. In Norway, it is estimated that 40% of the cigarettes smoked are smuggled.

Canada has one of the most serious contraband problems in the world. It's estimated that roughly 50% of all tobacco sold in Ontario is contraband. The provincial government admits to losing over $500 million dollars in tax revenue annually. Across Canada, that likely translates to billions in lost tax revenue.

In Canada, tobacco taxes have pushed the price of cigarettes far beyond what most consumers are willing to pay, beyond what many can afford to pay. But, the demand persists. And, given the economic incentive, there will always be those willing to supply that demand. Price no longer lowers consumption, it simply forces consumers to seek alternative, less costly sources of supply from an unregulated market.

And, despite large seizures of contraband, both in Europe and here at home, I suspect the involvement of “organized crime” is over-stated. I would opine that most of the smuggling is done by ordinary citizens; seniors, the unemployed and underemployed, and yes, a few small time crooks looking to make an easy buck.

In Europe, it's largely a matter of smokers buying cigarettes in low tax jurisdictions and smuggling them into jurisdictions where the anti-smoker crowd has convinced politicians that exploitive taxation is sound fiscal policy. In Canada, we have the added advantage of access to First Nations reserves where tax free smokes are available at a fraction of the cost of the taxed variety.

On a personal note, the cost of my pack a day habit and that of my wife is eased by regular trips to the First Nations. The $400 a month savings stretches my monthly pension cheque considerably.

Do I feel like a criminal? Hell, no!

The real criminals are the weal-kneed bastards in Ottawa and Queen's Park who allow the anti-smoker fanatics to lead them around by the nose. The hypocrites who target low income groups, pensioners and others on fixed incomes with unconscionable taxes in the name of public health.

1 comment:

Michael J. McFadden said...

Great start to the New Year Rambler! Two excellent postings!

I wanted to comment on the point about smokers not admitting their smoking to doctors. It's a very true point: I've seen the subject coming up more and more often over the past few years on the various email lists I'm active in.

People who have no desire or plan to change their smoking behavior simply get tired of being pressured/annoyed/put-down by their medical care providers. So they seem to be moving toward either lying about it or simply providing the classic "Oh, I'm trying to quit" response and then dumping the NicoGummyPatchy prescription they get into the trash. {Remember all those stats about "83% of smokers want to quit" etc? Of *COURSE* smokers are going to say that sort of thing to an annoying survey caller. They know darn well that if they say they LIKE smoking and DON'T want to quit that they'll get lectured and be called ignorant and stupid. Sheeeesh!}

And the response of the Antis was predictable and classic as well:

"Said Gar Mahood of the Non-Smokers Rights Association: "What they've done with this paper is mischievous and careless and ill-informed. These people have simply bought into the tobacco industry's mischief." "

The researchers are evidently too respectable for Mahood to actually accuse them of being tobacco industry "fronts" so instead he simply portrays them as being a bit "stupid" for "buying into the tobacco industry's mischief."

Keep on fightin' Rambler! We scored some real, though relatively minor, victories in 2009: let's make 2010 the year the Antis start to move solidly into a recession!

Michael J. McFadden
Author of "Dissecting Antismokers' Brains"