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A popular tax?
31 January 2010. By Dr Harry Hemley
The conventional wisdom is that any Treasurer who raises taxes on beer and smokes is dead meat politically. While this wisdom may still hold for alcohol, increased taxes on cigarettes is now a political winner — possibly the only popular tax.
For those who have watched family members and friends suffer with tobacco-related disease, a large tobacco tax increase could not come around soon enough. But support goes well beyond those who have been personally affected by the harms of tobacco.
When voters of the previous century punished governments for increasing the taxes on cigarettes, the majority of voters actually smoked — in the 1950s, around 70 per cent of men smoked. As late as 1988, one in three adults were regular smokers. An increase in tobacco tax hit the hip pocket nerve directly.
(The smoking habits of journalists at the time may have also had a bit to do with the hysterical reporting of taxes on smokes. Luckily, journalists are now a much healthier bunch.)
Fast forward to 2010, and only about one in six voters smoke daily. Only a small proportion of voters are hit in the hip pocket nerve by an increase in tobacco taxes.
And crucially, every smoker now knows that tobacco is bad for them. Most recognise that their smoking harms others and costs the community. Smokers know that 15,000 Australians die each year from tobacco-related illnesses, and that the cost to the economy is over $30 billion a year.
Also, smokers want to quit. Increasing the price of tobacco will prompt people to stop smoking. According to a recent Cancer Council Victoria survey, a price increase of 50 per cent would prompt almost three quarters of smokers to attempt quitting, and prompt six out of ten smokers to cut their intake. Increasing taxes provides the incentives to do the right thing for their health.
Young people today know that smoking causes death and disease, and is considered a filthy drug by much of the community, yet some still take up the habit. A large tobacco tax increase would price many young people out of the tobacco market and save the health system a packet in the long term.
The Cancer Council survey showed that more than 60 per cent of current smokers were in favour of a tax increase on cigarettes. That’s a big proportion of people saying “please tax me more” — not in the abstract way that some people say we need more government services, but a direct response to a tax on current consumption.
So only one in six smoke, and 60 per cent of smokers would actually welcome a tax increase. That just leaves a rump of less than seven per cent of the population who would get upset at an increase in tobacco taxes.
So in tough economic times and a mounting deficit, there’s a tax increase that would be welcomed by 93 per cent of Australians. There would also be health benefits and productivity savings as people quit smoking and children didn’t take up the habit.
What are you waiting for, Mr Swan?
Dr Harry Hemley is president of the Australian Medical Association Victoria
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