Wednesday 1 October 2014

Winding up prohibitionists with the truth

Liberal Democrat Senator David Leyonhjelm has caused outrage in Australia by telling the truth about the economics of smoking. This is recommended viewing...

Here is some of what he said...

"Ladies and gentlemen, thank-you for smoking.

Australian smokers contribute significantly to the pile of money that – as I noted in this place recently – other people then spend.

As you well know there are many such big spenders in this parliament, as are many of the people who malign you.

They don't like your habit, but in my view they have an even filthier habit: spending your money – and other people's money – on things that are often even sillier than spending too much on cigarettes and booze.

Your generosity to the nation's treasury is truly staggering. 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.

... Because the revenues versus costs figure is so lopsided, those who would tell you how to live have tried to add 'social costs' to the healthcare costs I discussed earlier. 'Social costs' take in things like smokers' spending on tobacco, and the lost productivity represented by smokers' earlier mortality. These, allegedly, represent income foregone.

By that logic, deciding to work part time to increase your leisure time is a social cost, as is going on holiday.

Arguments like that suggest to me the anti-smoking lobby is running out of ideas.

But when powerful, well-funded lobby groups run out of ideas and arguments, unfortunately they don't fold up their lobbying tents and head home.

They keep lobbying, and we've now reached the point where, thanks to their efforts, the government is about to kill the goose that lays the golden egg, handing all the lovely tax money it extorts from you over to organised crime."

... 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'. And if – along with South Park's Mr Mackey – we can agree that 'drugs are bad, mmmkay', it's probably also fair to say that 'regressive taxes are bad, mmmkay.'

Calling regressive taxes 'sin taxes' doesn't hide the scale of the problem. Smokers are typically poor, which makes this vast tax-take all the more perverse. It means, for example, that social planners who want to redistribute money from the rich to the poor need to increase both welfare payments and income tax rates to achieve their goals. When the 25 per cent excise increase was imposed, the Australian Customs and Border Protection Service noticed an increase in seizures of illicit tobacco.

In 2013, it rose to 183 tonnes, representing forgone customs duties of $150 million. Remember, that's the annual cost of putting out bushfires due to cigarettes.

And it's also entirely to be expected: tobacco can't even be commercially grown in Australia. Smokers of Australia, despite your generosity, I need to apologise on behalf of the short-sighted pickers of your pockets in this place.

Maybe they haven't studied any history, because if they did, they would learn that the regime controlling cigarettes is no longer one of 'legalise, regulate, and tax.' Instead, it now resembles two other regimes, regimes that were and are catastrophic failures. I'm thinking here of Prohibition and the War on Drugs."

1 comment:

nisakiman said...

Cue the inevitable wailing and gnashing of teeth from the anti-tobacco brigade with the deployment of all the favourite soundbites such as "sending the wrong message", and "smoking kills x thousands every year", and "smokers are a net cost to society" etc etc. No doubt they'll manage to shoehorn 'the cheeldren' in there somewhere as well.

Refreshing that there is a politician in Australia who is brave enough to put his head above the parapet and shine a little light on the realities of the situation. I hope he's prepared for the storm of ad homs heading his way.