3. The employment argument

25 Jun 2013

The tobacco industry sometimes argues that tobacco tax increases cause unacceptable job losses, particularly in the retail sector and amongst tobacco growers.  Figure 21 shows an example from the United States, where tobacco company Reynolds American seeks to mobilize retailers against tobacco tax increases by claiming they will lead to job losses.27 Often this argument is made orally to legislators or government officials instead of put in writing, as it is quite easy to show it is nonsense.

Figure 21. Mobilizing US retailers

Responses:

  • The industry consistently overestimates the number of jobs that are actually dependent on sales of tobacco products. While it is true that many wholesalers distribute tobacco products, many trucking companies transport them, and many retailers sell them, there are relatively few in each category that exclusively distribute, transport or sell tobacco.
  • The industry pretends that when tobacco users quit because of higher taxes, the money they used to spend on tobacco evaporates. In reality, the money is instead spent on other products — each of which in turn needs to be distributed, transported and sold.28
  • With respect to tobacco growers, leaf prices are largely dependent on global demand for tobacco leaf, not on national demand. Even a very large tobacco tax increase in one country is unlikely to have much, if any, impact on global sales. Moreover, because of population growth, global tobacco consumption continues to increase29, and is unlikely to decline rapidly any time soon in the absence of unforeseen reductions in global per capita consumption.30

Back to the illicit trade argument

Proceed to the government paternalism argument

27 http://www.transformtobacco.com/Pages/Taxes.aspx

28 World Bank, 1999, op. cit. Available on-line.

29 Food and Agriculture Organization. Projections of tobacco production, consumption and trade to the year 2010. Rome: FAO, 2003. Available on-line.

30 Guindon E, Boisclair D. Past, current and future trends in tobacco use. Health Nutrition and Population Discussion Paper, World Bank Human Development Network, 2003. Available on-line.

Related News

View All News >

Stay informed with our newsletter

Follow us