In the video that I posted earlier in the week, Senator David Leyonhjelm made the simple and truthful observation that smokers pay much more in tax than they will ever get back in services. Not only do smokers subsidise nonsmokers to a significant degree, but the extra burden of taxation is disproportionately placed on the poor because the poor are much more likely to be smokers.
He said:
The government collects around 8 billion dollars in tobacco excise each year. That's a lot of cash. Last year, smokers imposed $318.4 million in net costs on Australia's healthcare system. Depending on rainfall, smokers also cost the taxpayer about $150 million a year in bushfire control.
If you do even basic arithmetic, these figures disclose that you wonderful, generous smokers pay 17 times as much as you cost.
... Here's a little basic maths: if you spend $5,000 a year on tobacco, it's a bigger proportion of your income if you earn $30,000 per annum than if you earn $100,000 per annum. In the trade, that's what's known as a 'regressive tax'.
This is indisputable, so how does Chapman respond? I will quote his reply to this particular argument in full in case you think that I am picking selective quotes to make him look like a dunce. Each quote directly follows from the previous one.
Leyonhjelm thanked smokers for making (albeit reduced) lifetime contributions to tax collections. So are the 87 per cent of us who don't smoke just scrooges who deserve exposure for our unpatriotic parsimony? Should the government make a massive U-turn and encourage more people to smoke?
Note the early appearance of a straw man. The argument for lower tobacco taxes is that these taxes far exceed the costs to the public purse of smoking (which they certainly do) and that they are regressive. Neither Leyonhjelm nor anyone else is suggesting that the government encourages more people to smoke. Chapman fails to address either of these issues in his post. Instead he goes off in a totally different direction, making a poor attempt to answer a question that has not been asked:
The reason why this is more than nonsense is that non-smokers don't go home each day and squirrel away in a jam jar under the bed what they would have otherwise spent on tobacco, had they been smokers, vowing to never let this money into the economy. Amazingly, we spend our money on other things, all of which - with the exception of fresh food - is GST taxed. This expenditure benefits all who are involved in the manufacture, provision and retailing of the goods and services we consume.
This has got nothing whatsoever to do with Leyonhjelm's argument. Leyonhjelm is not claiming that smokers put more "money into the economy" than nonsmokers. He is saying that a disproportionate amount of money is being sucked out of the pockets of smokers and put into the hands of grasping government officials. He makes it clear in the very first lines of his speech that he thinks it is wrong that smokers are forced to hand over so much cash to the "big spenders in this parliament". Granted, he couched this criticism with irony, but the irony was so crude that surely even Chapman realised that he doesn't think that big government spending is a benefit.
The only way in which Chapman's nonsense about squirreling money away in jam jars would be at all relevant would be if Leyonhjelm was arguing that (a) the government should encourage people to smoke, and (b) higher smoking rates are good for the economy. Obviously, he was doing neither.
Next, Chapman starts arguing with his own side...
Yes, there is the special tobacco tax which - depending on which brand you buy and from which shop you buy from - ranges between 57 and 70 per cent of retail price (the rest goes to the manufacturers and retailers).
Indeed. And a rate of 57-70 per cent is much more than the GST (sales tax) of 10 per cent that applies to other products. Hence, as Leyonhjelm argues, it is regressive, unfair and discriminatory.
But this is only a transfer payment to government within the economy, not wealth generation.
No kidding. Taxation does not generate wealth. That is an argument for cutting taxes and leaving more money in people's pockets, is it not?
It is, to put it mildly, unclear what point the geriatric sociologist is trying to make here. It is true that taxation is only a transfer of income, but you would only mention that if you were arguing against someone who claimed that taxation is a good thing because it creates growth. Again, Leyonhjelm is not saying that.
Nearly all of the tobacco sold in Australia is manufactured by three transnational tobacco companies, none of which are listed on the Australian stock exchange and only one of which still manufactures in Australia. Most profits are expatriated to international shareholders.
At this point, Chapman is so far from discussing the issue at hand that he is not even wrong. He started by debunking the notion that smokers put more money into the economy than nonsmokers. He then debunked the notion that tobacco taxes create wealth. He now seems to be debunking the notion that tobacco sales are good for the domestic economy (to which his reply introduces a whole new layer of wrong by implying that overseas trade is a bad thing).
I hate to repeat myself but no fair-minded reader could infer that Leyonhjelm believes any of the things that Chapman is trying to debunk. On the contrary, it is quite clear that he doesn't believe them. It should be obvious to the laziest reader of Chapman's article that he has completely side-stepped all of Leyonhjelm's objections to punitively high tobacco duty.
But it is not over. Chapman has another straw man to assault...
The fraternal twin of this narrative is a continuation of one exposed in 2001, when it was revealed that Philip Morris had been advising the Czech government that the tobacco control malarkey would cost them dearly. By having the decency to die early, smokers were doing us all a massive national service. They would unselfishly trim the old age pension list, and exempt themselves from perhaps 20 years of greedily storming the public health system with the fervour of a Boxing Day sales crowd. Philip Morris publicly apologised for what they had been whispering to the Czechs.
Actually, they were partly right. Every time a poor smoker dies before pensionable age, somewhere in the Treasury, a bean-counter moves a bead on the national abacus into "savings" territory.
You won't be surprised to hear that Leyonhjelm made no reference whatsoever to these savings. None. (You can read or watch the whole speech here.) On the contrary, he tacitly accepted the (incorrect) belief that smoking places a net burden on the public finances by saying "Last year, smokers imposed $318.4 million in net costs on Australia's healthcare system." He merely compared the government's official figure of $318.4 million to the $8,000 million taken in tobacco taxes.
It is, however, true that there are net savings from smoking-related diseases (and, indeed, many other diseases). This is not just "partly right", as Chapman puts it. It is an economic fact that has been proven in dozens of studies and is supported by logical deduction. Indeed, it was confirmed again a few weeks ago in a study in PLoS One which concluded:
Elimination of diseases that reduce life expectancy considerably increase lifetime health care costs... The stronger the negative impact of a disease on longevity, the higher health care costs would be after elimination.
So how does Chapman deal with this fact? By bringing on the Nazis, of course...
But this is right in exactly the same way that those in charge of Nazi "arbeit macht frei" work camps were correct that the sick and infirm were no longer needed because they could no longer contribute to the work schedule.
Wow. We really are in the realm of mental, below-the-line internet comments now, aren't we? I don't even know where to start with that, suffice it to say that a fact is not right or wrong depending on what policy implications the Nazis might or might not have derived from it.
In Big Tobacco's world, smokers who die early are not to be pitied or a reason to think about how to prevent this [sic].
The reductio ad absurdum of this reasoning is that all prevention that stops people living into old age should be scythed as unpatriotic.
I think the reductio ad absurdum line was crossed when you brought Auschwitz into it, Simon. And whose "reasoning" are you talking about exactly? David Leyonhjelm never mentioned the savings associated with smoking, let alone did he suggest that the elderly be culled and concentration camps be built. He was talking about the revenue from tobacco taxes exceeding the cost of the externalities associated with tobacco use. You are talking to voices in your head.
How long will it be before the NHMRC is lobbied to audit and then blackball all health and medical research which might keep this flood of longer living spongers from sucking on the government public heath and welfare tit?
If I was capable of delivering a low blow, I'd say that Chapman knows all about being a "living sponger". And being a "public health tit" for that matter. Instead, I will leave him to spiral deeper into his madness and I trust that the reader noticed his total failure to address any of the substantive points raised in Leyonhjelm's speech.
