Reducing smoking with tax incentives

Implementation

In 1998 a packet of cigarettes in the UK cost £3.64 ($5.82), of which £2.88 went to the government in taxes. The same packet of cigarettes cost £1.49 less in France, £1.67 less in Germany and £2.11 less in Spain. On average, a British packet of cigarettes costs about £1.50 more than a packet in any other European country. The average packet in America cost about $2.05 of which 61 cents are taxes, not counting sales and municipal taxes.

Counter-claim

Because smokers tend to die earlier than nonsmokers, the short-term costs of treating tobacco-related illness are balanced, and probably outweighed, by savings on social security, nursing home stays, and medical care in old age. Every analysis that takes such long-term savings into account, including reports from the US RAND Corporation, the Congressional Research Service, and Harvard economist W. Kip Viscusi, concludes that "social cost" cannot justify raising cigarette taxes.