Smoking saves £14.7 billion

Contrary to popular belief, the three most censured ‘lifestyle factors’ – drinking alcohol, smoking tobacco and eating to obesity – do not cost the UK taxpayer money, according to a note posted on the Institute of Economic Affairs’ (IEA) website.

In fact, the punitive taxes levied on the products that fuel these lifestyles more than cover the costs they impose on public finances, ‘providing a net saving to the government of £22.8 billion,’ the IEA says.

The findings of the latest instalment of a three-part series of reports from the IEA, debunks the claims of public health campaigners that these lifestyle choices are draining public services.

‘It may be easy to point the finger of blame at smokers, drinkers and the obese for rising NHS [National Health Service] costs, but this no longer stands up to scrutiny given the findings of this report and the levels of taxation now levied on “sin”,’ the IEA note said. ‘And by scapegoating these people, campaigners and policymakers risk ignoring the real problem that our healthcare system faces: an ageing population.’

The latest report, Smoking and the Public Purse, is said to be the first of its kind to measure the net effect of smoking on the taxpayer in the UK, including savings and focusing purely on external costs.

The costs and savings from smoking are said to be:

• The government spends £3.6 billion treating smoking-related diseases on the NHS and up to £1 billion collecting cigarette butts and extinguishing smoking-related house fires.
• The government saves £9.8 billion annually in pension, healthcare and other benefit payments due to premature mortality.
• The government brings in £9.5 billion annually in duty paid on tobacco.

This means that smoking produces a net saving to the government of £14.7 billion a year, at current rates of consumption.

“We are constantly being told that people who choose to drink, smoke or eat too much are a burden on the UK taxpayer,” said the report’s author Christopher Snowdon, head of Lifestyle Economics at the IEA. “This is one reason why we have seen such aggressive hikes in taxes on alcohol, smoking and very soon, a tax on sugar. But the justification for these taxes is based on an illusion.

“Smokers, drinkers and those who are obese actually provide a net benefit to the public finances, so vilifying them is futile in the quest to make savings for the NHS.

“A careful consideration of the evidence shows that the popular belief that costs will fall if people live healthier and for longer is false. While it’s good that we now have longer life expectancies, policymakers must now address how we tackle the financial consequences of the ageing population rather than pointing the finger elsewhere.”

The IEA note is at https://iea.org.uk/media/uk-will-pay-almost-25-billion-in-sin-taxes-next-year/; from where it is possible to download a copy of ‘Smoking and the Public Purse’, and the separate reports on alcohol and obesity.