5% increase in tobacco taxation needed to account for high cost of smoking to society

Cancer Research UKMar 23 2010

Tobacco duty 'must rise' to reflect cost of smoking to society

A leading think tank has recommended a five per cent rise in tobacco taxation in the next Budget to reflect the high cost of smoking to society.

In its latest report, entitled 'Cough up', Policy Exchange reveals that the Treasury receives £10 billion per year from tobacco taxation.

But this figure is lower than the actual cost to society of smoking, which is calculated to be about £13.74 billion.

Policy Exchange says that cigarettes alone account for £12.82 billion of the overall cost and that the cost of a pack of cigarettes would need to rise from £6.13 to at least £7.42 for their true cost to society to be reflected by their price.

According to the think tank, the cost of smoking is made up of the cost of treating smokers on the NHS (£2.7 billion); loss in productivity due to smoking breaks (£2.9 billion); increased absenteeism (£2.9 billion); the cost of cleaning up cigarette butts (£342 million); the cost of smoking-related fires (£507 million); and the loss in economic output from the deaths of smokers and passive smokers (£4.1 billion and £713 million respectively).

Report author Henry Featherstone, head of Policy Exchange's health and social care unit, said that smoking is the single largest preventable cause of serious ill health, claiming tens of thousands of lives each year in England alone.

"It is a popular myth that smoking is a net contributor to the economy - our research finds that every single cigarette smoked costs the country 6.5 pence," he revealed.

"In order to balance income and costs, tobacco duty should be progressively increased until the full societal cost of smoking is met through taxation."

Policy Exchange recommends that tobacco duty should be increased by five per cent at the next Budget in order to reduce smoking by 2.5 per cent and provide an extra £400 million for the Treasury.

This would mean that the cost of a typical pack of cigarettes would rise by 23 pence.

Robin Hewings, Cancer Research UK's manager of tobacco policy, said: "Price increases are the single most effective way of reducing smoking and this report makes a strong case for raising the price of tobacco by five per cent in the coming Budget.

"This report also sets out very clearly the health benefits of NHS Stop Smoking Services and the gains that can be made from increasing their availability. If these services are more easily accessible, more smokers can be helped to quit.

"Smoking causes one in four cancer deaths and kills half its long-term users. We urge the Government and all political parties to maintain a focus on helping smokers to quit, to stop young people from starting and reducing the devastating impact that tobacco has on the lives of so many people."

According to the report, some of the extra revenue should be ploughed back into smoking cessation programmes, particularly among hard-to-reach groups such as pregnant teenagers.

The think tank has also proposed a number of other measures, including an increase in duty on hand-rolled tobacco to bring it in line with packs of cigarettes, thereby preventing it from being a cheaper option.

Pregnant mothers across the country should have access to a specialist stop smoking service, while financial incentives of £10 per week should be offered to mums-to-be under the age of 21.

Policy Exchange supports the use of mass media campaigns targeting young adults, citing evidence that such campaigns are effective at preventing addiction and reducing the prevalence of smoking.

Campaigns should also focus on existing NHS Stop Smoking Services, which are highly cost-effective but are used by only a tiny fraction of smokers who want to quit.

Finally, the think tank recommends the smoking cessation drug Varenicline as a first-line drug treatment for all patients who wish to quit smoking.