Talking about excise

Again, Matt and I found last year that collected alcohol excise tax revenues exceed tallied external costs of alcohol misuse, which include the public health costs. It's consequently pretty depressing when we keep reading folks claiming that alcohol tax increases are a good idea because of the costs of drunks to the emergency room system. Those costs can be good reason for doing something like punishing actual behaviours that lead to costs while drunk, like drunk and disorderly or fights or drink driving. But they're not reason for hiking the tax: the tax already covers those costs.

While this is true for alcohol, it's even more true for tobacco. Even the study commissioned by the anti-tobacco lobby agreed; I included this quote from their report in my review of the study in the New Zealand Medical Journal a couple years ago:

it does seem reasonably apparent that the tax contribution of approximately $1 billion annually by smokers exceeds substantially the external costs of smoking which fall on non-smokers. If savings on pension costs from premature mortality were added as well the net fiscal contribution of smokers, to the fiscal gain of non-smokers, would be further increased.

Moderate drinkers are over-taxed relative to the costs they impose; drinkers on average pay about the right amount of tax if we want collected taxes to match external costs. For tobacco, smokers are grossly overtaxed relative to the costs they impose on the public health system; this is true in every country where I've seen the numbers tallied. Any sensible review of excise taxes as a whole would reduce the excise tax on tobacco.