4. The government paternalism argument

25 Jun 2013

4. The government paternalism argument

In some countries, the tobacco industry or its allies argue that higher tobacco taxes are “unfair” to smokers, who are either being milked to pay for government waste or being forced into paying excessive amounts for their “adult choice” to smoke.

Occasionally, an academic will argue that existing tobacco tax levels are already far higher than any plausible third-party costs from smoking — that is, the financial or health damage to others. Probably the best-known proponent of this view is US economist Kip Viscusi (who also argues that smokers overestimate the risks of smoking).31 Viscusi has testified frequently in US courts on behalf of the tobacco industry. A more recent example, by law professor Gary Lucas Jr., is “Saving Smokers from Themselves: the Paternalistic Use of Cigarette Taxes”.32

Responses:

  • The majority of smokers wish they had never started smoking, and many support tobacco tax increases (particularly if the revenue raised is used in part to help smokers quit or prevent youth uptake).

The reality is that most tobacco users began using tobacco when they were young and are now addicted; many want help to quit, not to be left alone and provided with cheap products to feed their addiction. This clearly is neither “adult” nor a “choice”. Countries where ITC surveys have been conducted should have access to data on the percentage of smokers who regret having started to smoke.33 Many others should have data on the age at which tobacco users began using.

  • Many tobacco users significantly underestimate their risk of dying or falling ill from tobacco.

In China, for example, only a narrow majority of smokers are aware of the link between smoking and lung cancer; a minority are aware that tobacco smoke causes cardiovascular diseases.34 Raising tobacco taxes is one practical way to compensate for this lack of information — though of course it is even better if governments make it clear they are raising taxes on tobacco products specifically because they are so hazardous.

  • Finally, the vast majority of citizens expect governments to take measures to protect them from hazardous products.

We delegate to government the responsibility of evaluating information about the risks and benefits and deciding whether a drug should be banned, available on prescription only, or available without prescription. Similarly, governments impose safety standards on a wide range of consumer products, from cars to toys to television sets. Tobacco should be no different.

  • The issue of costs is a red herring. The tobacco industry arguing that tobacco taxes already more than compensate for the costs of tobacco use is like an individual arguing that they don’t drive, so they shouldn’t have to pay taxes for roads. Taxes do not function as direct payment for goods and services used. Taxes are raised to cover the costs of providing government goods and services across the board. Individuals and businesses, including the tobacco industry, do not have the luxury of picking and choosing what individual goods and services they support with their taxes.

If you do get drawn in to arguing costs, point out that the tobacco industry (and the economists it hires and/or surreptitiously finances) almost always under-estimates the social costs of tobacco use. The biggest cost from tobacco is unrelated to the health-care system. Every working tobacco user who falls sick or dies because of tobacco represents a loss of labour, expertise and productivity to society. Governments lose tax revenues; employers lose experienced workers and have to train new ones. This loss of productivity is typically very large — even in high-tax countries, it is considerably larger than the revenue from tobacco taxes.35

Sometimes industry-backed studies count lower pension payouts to smokers due to premature mortality as a “gain”, to be set off against health-care costs. Use ridicule to counter this argument: It suggests an economically rational government should kill its citizens as soon as they retire, and that old people are nothing more than an economic weight on society.

Back to the employment argument

Proceed to the regressivity argument

31 For example, W. Kip Viscusi, Cigarette Taxation and the Social Consequences of Smoking. In James Poterba, ed., Tax Policy and the Economy, National Bureau of Economic Research, Vol. 9 (1995), pp. 51-101. Available on-line.

32 Available on-line.

33 International Tobacco Control Policy Evaluation Project.

34 ITC. ITC China Summary. February 2009.

35 See, for example, the study on the costs of exposure to second-hand smoke by the U.S. Society of Actuaries, available on-line.

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