11. Policy Implications of the Social Costs of Smoking The high and increasing costs of smoking indicate the need for effective public policies to combat the smoking epidemic. The most important component of such policies should be high tobacco taxes, which will both reduce tobacco demand and provide the revenues to fund other anti-smoking strategies. These strategies include bans on tobacco promotion and on tobacco sales to minors, effective health warnings on tobacco packaging, reductions in cigarette tar levels or the use of tobacco tax rates related to tar levels, public health education programmes and the creation of smoke-free workplaces and public areas. These policies will yield substantial health and economic benefits to government, business and individual members of the community. It is clear that the social costs of smoking in Pacific Island countries are high and that they are likely to increase as smoking prevalence increases and the full effects of the smoking epidemic are felt. Moreover, the costs of the smoking epidemic to public budgets will become increasingly burdensome over time. What policies should be implemented to contain, and eventually reduce, these costs? Firstly it should be stressed that no single public policy instrument can be expected to achieve the necessary reduction in levels of smoking prevalence and tobacco consumption. It is necessary to implement a programme of policies, all acting together and reinforcing each other. Some policy instruments will be relatively cheap to implement while others will involve a substantial funding commitment on the part of government. The main pillar of any anti-smoking programme must be high levels of tobacco taxation. This will have the important dual effects of reducing the demand for tobacco and generating tax revenue which can be used to finance other anti-smoking initiatives. Tobacco demand is unquestionably sensitive to price increases in Pacific Island nations, as in all countries for which empirical evidence is available, although information on the degree of price sensitivity in individual Pacific Island nations is difficult to obtain. In countries in which tobacco demand is highly sensitive to tax-induced price increases, tobacco tax increases will be highly effective in reducing demand. They will not, however, yield substantial revenue for other uses, since the fall in demand will restrict the revenue (in the most unlikely eventuality that a tobacco tax reduced demand to zero, it would yield no revenue at all). There will also be public expenditure benefits because the fall in tobacco consumption will lead to a reduction in public expenditures, particularly on health. This reduction in expenditures will initially be small but will accelerate over time. In countries where the sensitivity of tobacco demand to tax-induced price increases is relatively low, the impact on tobacco demand of the tax will be less but, on the other hand, more revenue will be available to finance other anti-smoking initiatives. It is in fact a win-win situation for governments. It is most unlikely that tobacco demand is completely insensitive tax increases, just as it is highly improbable that tobacco taxes at politically feasible levels could ever reduce consumption to zero. Other important policies which should be introduced as part of an integrated anti-smoking programme include: Bans on tobacco advertising, tobacco sponsorships and indirect promotions (for example, the use of cigarette brand names for other unrelated products such as shoes and clothing) Bans on sale of tobacco to minors. Such bans will be effective only if properly enforced and backed up by a system of appropriate sanctions for tobacco sellers. This policy cannot be effective if tobacco vending machines are permitted. Effective rotating health warnings on tobacco packaging Reduction of permitted tar levels in tobacco (or possibly the linking of tobacco tax rates directly to tar levels) Effective public education on the dangers of smoking Creation of smoke-free workplaces and public areas The earmarking of tobacco tax revenues to fund these policies is a particularly effective funding technique. There is inevitably a temptation for governments to appropriate tobacco tax revenues for use in funding general public expenditures. If anti-smoking programmes are to be fully effective, at the very least a significant proportion of tobacco tax revenues should be earmarked for the funding of policies to reduce tobacco consumption. If governments have available to them estimates of the costs of smoking to the community and to the public purse, and thus are able to appreciate the full smoking toll, they are much more likely to see the benefits of these types of policies. What will be the community benefits of such a programme of policies designed to reduce the consumption of tobacco? The major benefits can be summarised as follows: Reduction in tobacco-related death and sickness, with the associated pain and suffering both of the smokers and others Reduced government expenditures, particularly on medical, hospital and other health services, including pharmaceuticals Reduction in production losses borne by business and the public sector Reduction in other costs such as crime, accidents, fires, pollution and litter Improved balance of payments resulting from reduced imports Improved availability of public and private resources for alternative (non tobacco-related) uses.