UK: real costs of tobacco

Disparity between tobacco income and societal costs

Policy Exchange’s latest report has found that the tax on tobacco is lower than the cost of smoking to society in the United Kingdom. While tobacco contributes £10 billion annually to the Treasury coffers, the cost to society is £13.74 billion. This cost comprises of treating smokers on the NHS at £2.7 billion, cleaning up cigarette butts at £342 million, the cost of fires at £507 million and the loss of economic output from the deaths of smokers and passive smokers at £4.1 billion and £713 million respectively. At the present, a pack of cigarettes costs £6.13, but this cost would need to be increased to at least £7.42 to make cigarette revenue neutral and their cost to society reflected by their price.

Henry Featherstone, Head of Policy Exchange’s health and social care unit and author of the report, suggested that as a starting part to achieve a balance between tobacco income and costs in society ‘the next Budget should increase tobacco duty by 5 per cent - this will reduce tobacco consumption by 2.5 per cent, and provide an additional £400 million for the Treasury’. As the Budget is round the corner, Chancellor of the Exchequer Alistair Darling could perhaps use the rationale outlined above as a reason to increase the price of cigarettes. In light of the fact that smoking is one of the largest preventable causes of serious ill health and death from non-communicable diseases, raising the price of cigarettes could be a good preventative measure to increase healthy living.

Source: Cough Up: Balancing Tobacco and Income and Costs in Society, Policy Exchange, 18 March 2010.

 

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