Wednesday, April 20, 2011

Government profits from kids smoking

The Spanish flu was a pandemic which killed an estimated 50 to 100 million people as it swept around the world in 1918/1919. In a few short years, the death toll in Canada alone was estimated at 50,000. It is considered one of the deadliest natural disasters in human history.

The anti-smoker zealots claim there are 37,000 tobacco related deaths each and every year in Canada. If those numbers are believed, then the death toll from tobacco far exceeds the estimates of death due to Spanish flu.

And, the government response to this purported mayhem? Tax the victims into extinction and sue the pants off those allegedly distributing the virus while allowing the body count to climb. Uh-huh.

Newfoundland is one of those Canadian provinces that passed “enabling” legislation in anticipation of a lawsuit against the country's tobacco companies. The Tobacco Health Care Costs Recovery Act, passed by the Newfoundland Legislative Assembly in 2001, paved the way for legal action against the tobacco companies to recover the the health care costs the government asserts were incurred in the treatment of tobacco-related illnesses.

This “enabling” legislation allows the province to sue the tobacco companies directly. It also allows the province to dictate the rules of procedure, including the rules of evidence, to be followed by the (provincially appointed) courts where the case will be tried. Enabling legislation, however, should not be seen as an attempt to stack the deck in favour of the government. Although there are clearly advantages to having the dealer on your side, Newfoundland was merely following the lead of other provinces and providing the house with a slight edge.

In February of 2011, the government of Newfoundland and Labrador announced it was prepared to proceed with the lawsuit. And, although they haven't specified how much money they're seeking in the statement of claim, it is expected to be a billion dollar lawsuit.

And, that makes it difficult to ignore the hypocrisy inherent in the government's action.

According to Physicians for a Smokefree Canada (PSY), Newfoundland spent roughly $95 Million on direct health care costs in 2006. In the same time frame, 2005/2006, they confiscated $116 million in tobacco taxes from the province's smokers, not including sales taxes.

The fact is that Newfoundland's tobacco consumers have already reimbursed the province for direct health-care costs, allegedly incurred due to tobacco use, on an annual basis. And, the same situation holds true for every other province in Canada.

On a nation wide basis, the combined provincial and federal revenue from sin taxes on tobacco was $7.09 billion in 2005/2006 (excluding provincial sales taxes and goods and services tax). Physicians for a Smokefree Canada estimates nationwide direct health care costs attributed to smoking at $4.35 billion in 2006.

Any way you look at it, in Newfoundland and in every other jurisdiction in the country, Canada's tobacco consumers are paying more than their share of health care costs.

Of course, you're not likely to learn that from newspaper or magazine articles on smoking. Most such articles, coming as they do from the main stream media, follow the “party line” of the anti-smoker zealots; portraying smokers as a financial burden on the health care system.

And, there seems to be another popular misconception among members of the general public; the belief that “smoking related” diseases are exclusive to smokers. For example; “I think the decision to smoke tobacco is the choice of each person, and the province should no longer foot the bill for smoking related illnesses. Then in turn, no lawsuit would be necessary.”

In fact, there is no such thing as a smoking related disease which can only be caused by smoking. Ischemic heart disease is referred to as a smoking related disease although only about 13% of the 40,000+ deaths annually are attributed to smoking.

So what the writer is actually proposing is that “the province should no longer foot the bill” for smokers, despite the massive amounts of revenue they contribute to government coffers.

While browsing through the “fact sheets” on the PSY website to check my figures, I came across another interesting tidbit; one to which I hadn't really given much thought.

The anti-smoker zealots are constantly berating the tobacco companies for marketing their product to children. And, that may or may not be the case. I suspect that claim, like most of the propaganda provided by the zealots, is something of an exaggeration.

But has it crossed anyone's mind that governments also profit from the sale of cigarettes to school-age children; that they make many times the profit from that demographic than the tobacco companies. Uh-huh. Someone at Physicians for a Smokefree Canada has taken the time to calculate the dollar amount spent by "school-age children" on tobacco.

“Based on Health Canada’s estimate that tobacco companies make $4.43 in profit on each carton of cigarettes sold, and that retailers make $3 on each carton of cigarettes sold, industry revenues that result from young Canadians smoking totals $14 million per year, or more than $50 per school-aged smoker.”

The kicker: “Provincial and federal governments collectively receive $83 million a year in revenue from tobacco taxes on cigarettes smoked by young Canadians, representing about $380 for each of the 220,000 young Canadian smokers identified in the survey.”

And, incidentally, PSY estimates that only 10% of the cigarettes smoked by the “young people” in their survey came from First Nations “contraband”.



Anonymous said...

The spiders web of ASH Scotland.

smokervoter said...

By luck of the mouse click, after reading this post, I stumbled upon a huge discrepancy in reported smoking-related costs between Canada and Australia. Chris Berg, writing at The Age of Australia website there stated :

"The government estimates smoking-related illness costs about $300 million a year. But it collects $5.8 billion each year in tobacco excise duty."

Canada spends $4.5 billion a year? That is over 14 times what the Aussies spend according to this article.

Canada has 35 million people, Australia has 22 million. Canada is 60% larger yet spends almost 15 times more? Can this be true?

Tobacco facts are like a wild roller coaster ride, the peaks and troughs are a thrill a minute.

This online research project got me over to the Canadian Wikipedia page and I'm so glad I did. I spent three hours there reading and clicking links. What a fascinating country. From Stadacona to Cartier to Maple Leafs to Inuksuk I clicked and clicked. There's a total news blackout here.

For the past couple of days I've been asking friends which country they thought had more people Australia or Canada? Every single person said Australia was much, much larger.

I really enjoy your website. And where did you get that graphic from? It's hilarious.