Government dependence on tobacco tax revenue

Nature

Most governments derive significant income through taxation of cigarettes and other tobacco products.

Incidence

In China the national tobacco monopoly produces almost a third of the world's cigarettes. In 1999 it was reported to employ 10 million farmers and provided the government with $10 billion per year in revenue through taxation.

The adverse health consequences of smoking and the higher work absenteeism of smokers bring about huge economic losses to countries. However, the economic benefits from tobacco-growing and the manufacture, marketing and taxation of tobacco products are enormous and many governments hesitate to take firm action against a habit whose dangers are now generally understood. While the European Community spends £7 million a year to campaign against smoking, its spends £870 million a year to subsidize tobacco production.

Claim

There is no compelling economic argument for governments to take firm action against tobacco consumption. The tobacco habit is sustained only by the profit motive. Smokers tend to die at an age when their working life is past, and treatment of cancer is less expensive than the social care of retired factory workers.