Newspaper article THE JOURNAL RECORD

Higher Taxes No Answer to Smoking Costs

Newspaper article THE JOURNAL RECORD

Higher Taxes No Answer to Smoking Costs

Article excerpt

Smoking costs society roughly $65 billion annually in health care bills and lost productivity. Shouldn't smokers shoulder this burden, amounting to more than $2 a pack, in the form of higher exise taxes?

This argument has great appeal to those frustrated by the slow pace of progress in the war against tobacco addiction - not to mention to congressmen looking for politically acceptable sources of revenue to reduce the budget deficit. It does not, however, stand close analysis.

The $2-a-pack estimate is on the mark, but smokers already pay their fair share. In fact, nonsmokers reap a grisly financial windfall since the typical smokers die long before they recoup their contribution to retirement funds.

There is still a strong case for using exise taxes as a deterrent to lighting up: Teen-agers are remarkably responsive to changes in the price of cigarettes. But as a matter of fairness, tobacco addicts shouldn't be milked as revenue cows.

One attractive alternative: putting more of the burden of anti-smoking efforts on cigarette manufacturers.

Probably the most credible estimate of the economic costs of smoking come from the Congressional Office of Technology Assessment. The agency's 1985 study assigns responsibiity for 16 percent of all fatalities to smoking-related illnesses, at a total health care cost of $22 billion. Smokers' fatal illnesses also reduce the labor force by more than 1.3 million person-years annually, cutting national income by about $43 billion.

Estimated cost for the 580 billion cigarettes sold last year: $2.24 a pack.

In light of the $2.24 figure, proposals before Congress to double the 16-cent federal exise tax seem to let smokers off easy. But the fact that smoking costs someone $2.24 a pack doesn't necessarily imply that smokers should pay an equivalent amount in taxes.

According to two Swiss researchers, R.E. Lau and T. Schaub, premature deaths from smoking probably put no greater financial burden on the health care system than a more natural mix of fatal illnesses.

And while these premature deaths do reduce national output, standard economic theory of wage determination suggests that virtually all of the income loss is absorbed by the victims. Indeed, in dying four years earlier than a nonsmoker, a typical male smoker saves society some $20,000 in Social Security benefits alone, according to estimates by John Shoven, an economist.

This doesn't mean that a higher excise tax on cigarettes would be undesirable. Probably the most effective, non-coercive means to prevent addiction is to price tobacco out of reach of teen-agers. …

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