October 22, 2009 - A Western Australia (WA) report that reveals the $31 billion social cost of smoking to the Australian economy is a mandate for tobacco taxes to be hiked, health groups say.
The Cancer Council of Western Australia today released what it says is the first independent analysis of economic arguments put forward by the tobacco industry.
The report was produced by internationally renowned health economists, Professors David Collins and Helen Lapsley, assessed the economic impact of both the tobacco industry and public health measures aimed at reducing tobacco use. It put the economic contribution of the tobacco industry at about $1 billion a year and the estimated social costs of smoking at $31 billion.
Cancer Council WA tobacco program director Denise Sullivan said the report debunked claims by the tobacco industry that higher tobacco taxes would be detrimental to the Australian economy. Ms. Sullivan: "The tobacco industry frequently employs economic scare tactics when policy makers are considering measures for reducing demand for tobacco, such as increases in taxes on the sale of tobacco. This report provides the evidence that there would be few, if any negative economic consequences in further measures to curb tobacco use in Australia."
Professor Helen Lapsley said tobacco control measures did not cause economic harm. "A fall in demand for tobacco, while significantly affecting the tobacco industry, will have very little, if any, negative economic impact," Prof Lapsley said. "Indeed, it is possible that the overall impact would be mildly positive."
Professor David Collins said the tobacco industry's arguments against increased taxes on the product were flawed. "The industry fails to take into account healthcare costs imposed on the community for the treatment of illnesses caused by tobacco," Prof Collins said.
Tobacco industry studies estimate cigarette and tobacco retailers provided 500,000 Australian jobs.
But Prof Lapsley said the number was overstated and the study found the industry was a minor and declining contributor to manufacturing output and employment, with profits largely remitted to parent companies overseas. Lapsley: "The figures put forward by the tobacco producers include jobs of those who sell materials to the industry as well as those at the retail level for whom only a fraction of their business depends on tobacco. It also ignores the fact that money saved by quitting or reducing smoking will be spent on other goods and services, themselves generating employment and tax revenues." (Report by Professors Lapsley and Collins: The costs of smoking to Australian society..)
Public Health Association of Australia president Mike Daube said the tobacco industry's arguments were misleading and based on self-interest. Professor Daube: "Big tobacco has opposed increased taxes on its products on the basis of the economic harm this would cause." "It's time for taxes on tobacco to be increased."
Prof Daube said Australia had not had a significant tax increase on tobacco for 10 years and was one of the lowest tobacco-taxing countries in the Organization for Economic Cooperation and Development (OECD). Dr. Daube: "This report gives the federal government a strong mandate for a significant tobacco tax increase, which will also enable them to spend more money on public health, including further action to reduce smoking, which still kills one in two regular smokers." "The only people with anything to lose with this strategy are the tobacco companies themselves."
The report found poorer consumers were more susceptible to tax increases and more likely to reduce consumption.
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A study was commissioned by VicHealth found the economy would be $1 billion better off if the rate of smoking was cut by one third.
References: WA Cancer Council says smoking costs economy $31 billion Andrea Hayward, Sunday Times and PerthNow, 10/21/2009; Tobacco tax may help economy, Cancer Council Western Australia, ScienceAlert.com, 10/21/2009.
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