Friday 13 August 2010

Costs of smoking

I'd noted a couple of months ago that it seems likely that MoH has substantially overestimated the costs of smoking borne by the public health system.

The folks at MoH have punted the number back to the analysts who produced the number to see whether my read of the figure is correct, or at least according to the email I got back from them two months ago. But I've not heard anything back from MoH on repeated request; I've emailed the Minister's office for assistance.

Ashley Bloomfield, one of the tobacco control folks at MoH, was on National Radio end June, still citing $1.5 billion in costs to the public health system. And the figure (this time $1.9 billion) is still on their website, here. I'm not sure if that means that they stand by their number but are refusing to tell me why, or if they haven't checked their figures yet.

But is a $1.9 or $1.5 billion cost figure even plausible? The tobacco excise tax take is about a billion dollars, so they're reckoning more than a half a billion dollars in annual net cost in a country of 4 million people.

The infographic here shows tobacco excise taxes by US state: New York's rate is the highest, with a combined state and local tax of $3.75 per pack: about NZ$5.36. The average rate is under $2 ($NZ 2.86) per pack.

NZ's duty of $345.87 per 1000 cigarettes works out to $6.92 for a pack of 20.

Viscusi shows pretty convincingly that American smokers save the public purse a whole lot of money. Our tobacco taxes are much higher than even the highest American excise tax rate. Yes, we have a public health system. But so too do the Americans: Medicare will wind up catching a whole lot of the health costs accruing to smokers over the age of 65, and Medicaid will catch the health costs accruing to younger poor people. Is it really prima facie plausible that tobacco has net very large costs to the public purse in New Zealand? I don't buy it.

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