The fag-end of poverty politics
Authoritarian ‘sin taxes’ are making the poor poorer.
You’ve got to admire the folks at Action on Smoking and Health (ASH). Not for their puritanical, tobacco-hating monomania, of course, but for their sheer chutzpah. This is an organisation that should have brass balls on its logo. ASH’s latest effort at ignoring the facts is so brazen that even former Iraqi government spokesman Muhammad Saeed al-Sahhaf, aka ‘Comical Ali’, would have to doff his beret in respect.
A new report commissioned by ASH, and produced by Landman Economics, looks at the effect on poverty rates if people in poorer households quit smoking. The report concludes: ‘Before taking tobacco expenditure into account, the overall household poverty rate is 16.8 per cent of households – just over 4.5million households in poverty. After taking tobacco expenditure into account, the number of households in poverty increases to 18.8 per cent – just over five million households. The inclusion of tobacco costs moves an extra half a million households into poverty.’ The relative effect is even greater when only those households with positive tobacco expenditure are included, with the poverty rate rising from 20.6 per cent to 29 per cent.
In terms of the number of people involved, the report says that over 850,000 adults and almost 400,000 children are classified as in poverty in the UK because of the money spent on tobacco. The figures in the ASH report are similar to those published in May in the journal BMC Public Health by a group of researchers from Nottingham University.
The elephant in the room is the fact that the vast majority of that tobacco cost is taxation. Excise duty on cigarettes is £189 per 1,000 cigarettes – or £3.78 for a packet of 20. On top of that, there’s an additional charge of 16.5 per cent of the retail price. And on top of that, there is value added tax (VAT) of 20 per cent. That means that for a premium brand of cigarettes, 74 per cent of the price is tax. On budget brands, that rises to well over 80 per cent.
You might foolishly think, therefore, that poverty could be reduced by cutting this astonishing rate of tax. And this is where the ASH report becomes completely shameless. ‘It is important, however, to avoid concluding from these results that a suitable policy response would be to reduce tobacco taxation to make tobacco products more affordable. Previous research shows that increases in tobacco taxation are potentially a progressive measure in economic and health terms because poorer smokers are more likely to quit, and young people less likely to take up smoking, when tobacco prices increase because poorer households and young people are more sensitive to price increases. Indeed, raising tax is the only tobacco-control intervention that has been proven to have a greater effect on more disadvantaged smokers at population level and so contribute to reducing health inequalities.’
With this stunning logic in mind, ASH therefore proposes increasing tobacco taxation further. The very tax that is pushing families into poverty should be pushed up even more until smokers are forced to choose between smoking and eating. It is apparently ‘progressive’ to make poor people poorer.
If ASH was really serious about the problem of poverty, it would call for a cut in the enormous tax paid on cigarettes rather than demand that poorer people change their behaviour. As it is, regressive ‘sin taxes’ and higher prices are always at the forefront of demands from health campaigners, whether it is tobacco taxes, minimum alcohol pricing or taxes on sugary drinks.
As John Stuart Mill pointed out in On Liberty: ‘To tax stimulants for the sole purpose of making them more difficult to be obtained is a measure differing only in degree from their entire prohibition; and would be justifiable only if that were justifiable. Every increase of cost is a prohibition to those whose means do not come up to the augmented price; and to those who do, it is a penalty laid on them for gratifying a particular taste.’
This report simply confirms Mill’s point. ASH is far more concerned about stamping out our freedom to indulge in a ‘bad habit’ than in the problem of poverty. ASH is appealing to our concern for children in order to force adults to fall in line with its idea of a suitable lifestyle. You could lick a well-used ashtray and it would leave less of a bad taste than ASH’s cynical moralising.
Rob Lyons is campaigns manager at Action on Consumer Choice.
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