Thursday, September 9, 2010

Smoking . . . always about the money

It seems everybody wants to make money off smokers these days, especially cash strapped governments. State governments in the US, provincial governments in Canada, and federal governments around the globe are turning to smokers to generate additional tax revenue in these trying economic times.

In North America, Great Britain and Europe, governments tell the public that usurious sin taxes are for a smoker's own good. This government sponsored extortion, the politicians tell us, is an act of kindness meant to “encourage” smokers to quit the evil, injurious habit. Uh-huh.

Of course, regressive sin taxes, more often than not, are counter-productive. Contraband tobacco has become a serious issue in Canada (and around the western world), for example. It's estimated that in Ontario, over half the cigarettes sold are contraband. In Quebec, contraband is estimated at 40% of the cigarette market.

Readily available contraband means retail outlets suffer from declining legal sales, putting jobs at risk. It makes cheap tobacco products available to minors who would be unable to purchase cigarettes from legal sources. And, it means governments can rely on only a fraction of the tax revenues their usurious tax policies were expected to generate. As law enforcement budgets escalate, tax revenue declines and ordinary Canadians become outlaws as they seek respite from confiscatory tax policy.

Politicians take refuge from any criticism of their discriminatory tax policy by citing public health concerns.

The truth is that governments spend millions on anti-tobacco campaigns, but that's a mere pittance compared to the billions they extort in tobacco tax revenues. In fact, the anti-smoker group Physicians for a Smokefree Canada estimated Canadian governments at all levels took in over seven billion dollars in tobacco taxes in the fiscal year 2007/2008.

That's a lot of money. And, it's money the government can't afford to lose. Assuming 5 million smokers in Canada, that's an average of roughly $1,400 annually extorted from every Canadian smoker. And, if that tax revenue were lost, it would have to be made up from other sources.

Distributing that tax burden across a Canadian population of 33 million would mean a tax increase of roughly $210 for every man woman and child in the country. A family of four would be paying somewhere around $840 per year in additional taxes. And, those believing that a reduction in health care costs would offset the need for those taxes are dreaming in technicolor.

And, it's the massive amount of tax revenue purloined from smokers that's behind government's refusal to prohibit sales of tobacco rather than ban smokers from all manner of social interaction, although politicians will deny it. And, it's why the anti-smoker fanatics aren't screaming for a prohibition on tobacco.

A clear demonstration of this hypocritical bullshit and bafflegab was seen in the North Dakota legislature back in January, 2003. That legislative body voted, 88 to 4, against a bill proposing to ban tobacco sales in the state. Anti-tobacco groups testifying against the tobacco ban included the North Dakota Medical Association, American Heart Association, American Cancer Society, American Lung Association, North Dakota Public Health Association and North Dakota Nurses Association. Uh-huh.

The North Dakota episode should cause everyone to question whether the war on smokers is really about public heath. And, evidence that smoking is not the public health issue the anti-smoker fanatics claim, was available as far back as 1975.

The 3rd World Conference on Smoking and Health, held in New York in June, 1975, recommended: “That it be recognized by all organizations and associations concerned with smoking and health that the campaign against smoking is political and economic in character and requires decisions based on political and economic factors.”

And, as the hypocritical stance of the North Dakota legislature and their anti-smoker minions demonstrated in 2003, prohibition of tobacco is simply not politically or economically expedient. Government would lose massive amounts of tax revenue and the anti-smoker zealots would lose their livelihood. So, the government and their taxpayer funded mercenaries in the anti-smoker brigade continue their charade, denouncing smokers while raking in the cash.

But, there are some politicians who appreciate the contribution of smokers to the national economy. The Russians, for example, are calling on citizens in that country, where 65% of men smoke and the average Russian consumes 18 litres of alcohol annually, to smoke and drink more because the government needs the tax dollars.

Russia's finance minister, Alexei Kudrin, explained recently that higher consumption would raise tax revenues so that more could be spent on social services. Says Kudrin: “If you smoke a pack of cigarettes, that means you are giving more to help solve social problems such as boosting demographics, developing other social services and upholding birth rates.” Huh?

The Russian government has announced pending increases in sin taxes on cigarettes and alcohol. But, at least they're being honest about the purpose of the increases. They want the money.

Unlike Canadian politicians, and others in the western world, they're not hiding behind a “public health” scam to pick the pockets of smokers.


Anonymous said...

I am Lysistrata.
You are spot on. The Greek government says it spends 2.14 billion euros on smoking-related illnesses. But is gets 8.37 billion in taxes from smokers.

Anonymous said...

Very good blog posting.

Let's also not forget about the contributions of the Pharmaceutical companies in this money chain.

It is unfortunate that most of the world's population suffers from attention deficit disorder on matters such as these. Most of the remaining population are either in a minority, or they are morally bankrupt scoundrels able to profit handsomely from the deceptions you describe.

Expat Brit living in Canada.

Anonymous said...

Just noticed your latest posting related to the Pharmaceutical interests.

You have covered this very well and already did it before my posted suggestion was made.

Excellent work.

Expat Brit living in Canada