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Death saves money

Will Hatchett09/08/2017 - 15:32

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Drinking and smoking taxes a net benefit claims report
Drinking and smoking taxes a net benefit claims report

A report from a leading think tank accusing the government of imposing ‘sin’ taxes and claiming that smoking benefits the economy has been branded as ‘sickening’ and ‘economically illiterate’ by Action on Smoking and Health.

A study from the Institute for Economic Affairs, Smoking and the public purse, claims to be the first to measure the net effect of smoking on the UK taxpayer, including savings. The report argues that the cost to the NHS of treating smoking-related diseases is £3.6bn. Another £1bn, it says, is spent on collecting cigarette butts and on smoking-related house fires.

However, the government, it claims, saves £9.8bn annually in pension, healthcare and other benefit payments due to premature mortality and raises £9.5bn annually in tobacco duty. This adds up to a net annual saving of £14.7bn.

Deborah Arnott chief executive of ASH told EHN: ‘It’s sickening that the tobacco industry-funded Institute of Economic Affairs considers that smokers dying prematurely is a benefit to society because it saves on pensions.’

She added: ‘The report is also economically illiterate because the costs in lost taxes, lost productivity and increased health and social care costs from smoking-related disease far outweigh any reduction in pension costs. This is not about vilifying smokers, two-thirds of whom want to quit. Increasing taxes makes tobacco less affordable, thereby helping prevent young people from starting smoking and encourage adult smokers to quit.”

The government’s tobacco action plan, she said, estimates the costs of smoking at £2.5bn to the NHS, £5.3bn to employers in lost production, £4.1bn to wider society and £760m in social care costs, totalling almost £13bn.

The action plan adds: ‘The true cost of tobacco use is likely to be higher with evidence now showing that smoking causes a greater range of diseases and death than accounted for here every year, additional costs are also incurred from smoking related fires and tobacco litter, as well as the wider costs associated with illicit tobacco and organised crime.

On drinking, the IEA claims the annual cost of medical treatment and dealing with antisocial behavior is £4.6bn, set against £10.7bn raised in duties – a net annual benefit of £6.1bn. The IEA admits that obesity incurs a net cost to the taxpayer of £2.5 billion a year. However, once a sugar levy is introduced this will decrease to £2bn. 

Christopher Snowdon, the report’s co-author, accused the government of imposing ‘aggressive hikes’ in taxes on alcohol and, sugar, arguing that they are ‘based on an illusion’.

He commented:It may be easy to point the finger of blame at smokers, drinkers and the obese for rising NHS costs, but this no longer stands up to scrutiny given the findings of this report and the levels of taxation now levied on “sin”. And by scapegoating these people, campaigners and policymakers risk ignoring the real problem that our healthcare system faces: an ageing population.’

On the question of donations to the IEA from British American Tobacco, confirmed in a letter to ASH from BAT’s head of corporate affairs, Simon Cleverly, at £40,000 a year, a spokesperson for the IIEA stated that it was the institute’s policy not make public its sources of funding from individual donors.

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