THE IRISH HEART Foundation is in favour of significant regular tax increases on tobacco products for one reason only – it has been proven the world over that they reduce smoking rates and save lives on a massive scale.
Unlike the tobacco industry and indeed the State which have a huge financial interest in the setting of tax levels, our only motivation in pressing for Budget increases is the pursuit of a healthier Ireland.
It’s important to make this clear. Whenever the profits of big tobacco are threatened, they muddy the waters with myths and misinformation. By understanding what’s behind both sides of the argument, people can dig out the truth.
And it’s vital they do. Smoking is the biggest cause of preventable death. It kills 5,700 people in Ireland each year – the equivalent of a jumbo jet crash a month, or two 9/11s every year. So let’s look at why tobacco tax increases are necessary and why we must resist the manipulation of public opinion by the industry to protect its profits.
1. Tax increases save lives International evidence proves that big tax increases work. And although our own research calculated a lower quit rate than studies by the WHO and World Bank, it still showed that a €1 increase on a pack of 20 cigarettes would reduce the number of smokers by 30,000. Given that one in two smokers are killed by their habit, this could ultimately save 15,000 lives.
2. Non-smokers subsidise smokers According to the Department of Health the cost of smoking-related illness is going to be €23 billion over the next 10 years at current rates. Yet based on last year’s yield, the tax take over the next decade will be just €14.7 billion.
So, rather than smokers being net contributors to the national finances, they are effectively subsidised by taxpayers who don’t smoke. And all we’re paying for is tobacco company profits. They don’t even create any jobs here as cigarettes are no longer manufactured in Ireland.
3. Tax increases don’t fuel smuggling The tobacco industry’s main argument against tax increases is that they fuel smuggling. This is a bit rich given that many of the world’s largest tobacco companies have been complicit in smuggling. The biggest – Philip Morris – agreed to pay the EU €1.25 billion in 2004 to halt lawsuits alleging they colluded in the smuggling of billions of cigarettes.
Anyway, their claims don’t stand up to scrutiny. In 2010 the Australian Government increased the price of an average 30-pack of cigarettes by 25 per cent to €10.64. As a result 300,000 people have successfully stopped smoking and there has been no impact on the country’s six per cent smuggling rate.
Spain also had a smuggling rate of 16 per cent in the 1990s. Between 1993 and 2000 resources to combat smuggling increased from €4m to almost €40m whilst the real price of tobacco went up by 30 per cent. The result was a drop in the smuggling rate to just two per cent.
The fact is that smuggling gangs don’t sit down and work out the relative profit margins of smuggling into one country or the next – what they do consider is how likely they are to be caught and what will happen if they are.
4. Irish tobacco smuggling is due to poor enforcement Despite some high profile seizures, inadequate manpower and equipment – including just two mobile scanners for the entire country – means smugglers are highly unlikely to be caught. Even if they are, the penalties are derisory. The highest fine handed down here for tobacco smuggling is €7,500. Compare this to the North where a fine of over €800,000 was imposed in a single case in 2008.
Until recently, when a sentence of 18 months was imposed, the highest jail term ever handed down was six months. This is despite the fact that tobacco smuggling is funding terrorism, people trafficking and the smuggling of heroin and cocaine.
5. The least well-off are affected most – by health inequalities It’s true that people with lower incomes are less able to afford tobacco tax increases than those who are better off. It’s also true that smoking is the biggest single driver of health inequalities in this country. We believe it’s far more important for the Government to bridge the appalling health gap between rich and poor than to make cigarettes affordable to all.
In total, 50 per cent more men and 90 per cent more women smoke in the lowest than highest social groups. The poorest are at least three times more likely to die from heart disease and stroke than the richest in our society.
Women aged 18-29 in the two lowest social groupings are the worst affected. Some 56 per cent smoke – almost double the national adult average. Therefore more than one in four women living in these communities will ultimately die from smoking. This is a health catastrophe that should shame us all.
So what should we do? Tax increases on their own won’t work. What we need is a co-ordinated strategy that also includes tougher anti-smuggling measures and realistic smoking cessation services.
Ten years ago the UK was roughly where we are now, with a smoking rate of 30 per cent and an illicit market share of 21 per cent. Today there are 1 million fewer adult smokers and the child smoking rate has fallen by 50 per cent thanks to the implementation of a national strategy.
Despite significant tax increases, the smuggling rate has fallen to 12 per cent. In return for expenditure of £300 million a year mainly spent on anti-smuggling measures, stop smoking services and advertising, the UK Government is receiving £1.7 billion in additional net annual revenue benefits and an estimated £1.2 billion in extra tax from reduced smuggling activity.
The benefits of action are huge and they are attainable. If we could match the success of the UK we’d save five extra lives from smoking every day, our health service costs would fall and we’d be taking in extra tax revenue to pay for vital services.
If ever there was a policy no-brainer, this is it.
Chris Macey is head of advocacy at the Irish Heart Foundation.
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