UICC Tobacco Control Fact Sheet 5
Tobacco - The Need for Alternative Economic Policies
Introduction
The tobacco companies are always ready with economic arguments
against the control of tobacco. Tobacco is vital to our economy,
they argue, because:
- Tobacco produces tax revenues
- Tobacco exports bring hard currency income
- Tobacco creates jobs
- Tobacco is a vital farm crop
They argue that action to reduce smoking will bring great harm
to the economy. Jobs will be lost; tax revenues will fall; exports
will suffer; farmers will be devastated. But they greatly exaggerate
the economic losses which tobacco control measures will cause
and they never mention the economic costs which tobacco inflicts
upon every country.
Tobacco Companies Argument: excise tax increases will discourage
smoking and thereby reduce government revenues.
- Raising tobacco taxes, no matter how large the increase, has
never once led to a decrease in cigarette tax revenues.
- When cigarette taxes are increased, fewer young people take
up smoking; light and moderate smokers tend to quit; but most
heavy smokers continue to smoke and to buy cigarettes. (1-5) This
keeps tax revenues high.
- Some of the money saved by quitters will be spent on other
goods which are also taxed. (6)
- Raising tobacco taxes is not an unpopular move. Studies from
several countries show that most people-smokers and non-smokers-support
increased tobacco tax as a means of preventing young people from
taking up the habit.(1)
Tobacco Companies' Argument: tobacco exports furnish critical
hard currency income.
- Much tobacco is consumed in the country of production. (7)
But in many countries much of the proceeds from cigarette sales
leave the country as transnational tobacco companies' profits,
directors' fees, payment for such costs as imported equipment,
licences, advertising of foreign origin and packaging.
- Two-thirds of developing countries spend more on importing
cigarettes than they gain from exporting tobacco. (8) Thus, reducing
smoking will reduce loss of foreign currency, as well as government
revenues lost to smuggling.
Tobacco Companies' Argument: the tobacco industry provides
thousands of jobs which will be lost if tobacco control policies
are adopted.
- If all tobacco control policies were adopted, tobacco consumption
would fall gradually over time. Most cigarette-related jobs would
remain for many years, and the gradual reduction of jobs would
allow workers to make an orderly transition. (2)
- The children of tobacco farmers will go into other occupations;
most tobacco farmers will not need to.
- In future, the introduction of mechanization in tobacco farming
and manufacturing will mean less employment anyhow.
- Money not spent on cigarettes will still be spent, but for
other goods and services, thereby creating new jobs. The
tobacco industry itself admits: "If the (tobacco) industry
would vanish tomorrow, most would find alternative work."
(9)
- There will be less work for lung surgeons, heart disease specialists,
nurses and firemen!
- But is a "balance sheet mentality" really appropriate?
The health profession earns its living from caring for the sick
and car repair workers from mending crashed cars. Is this an argument
against preventing disease or promoting traffic safety? International
drug dealers are certainly well paid but no one suggests that
this is an argument against trying to control their activities.
So should it be with tobacco. (10)
Tobacco Companies' Argument: Tobacco farmers benefit from the
cultivation of tobacco, and other farmers benefit from the new
skills and technology which the tobacco companies introduce.
Therefore, tobacco cultivation and consumption should be encouraged.
- "The lion's share of profits goes to these (tobacco)
companies, and not to producers" states the World Health
Organization. (11) In Malaysia, for example, the profit margin
for farmers is only 2%, but for manufacturers, 79%. (12)
- As tobacco control programmes throughout the world take root,
tobacco will be in oversupply and the price will fall.
- Other crop programmes supported by the World Bank and other
development agencies could provide the same skills and technology
without these harms. Alternative crops are being introduced (such
as wheat, sweet potatoes, coriander and yellow evening primrose)
but these have only been on a very small scale.
Costs to Government, Business, the Individual and the Environment
The tobacco companies never talk about the great economic costs
that tobacco inflicts upon governments, upon business and industry,
upon individuals and their families, and upon the environment.
The Costs to Government
- Where governments provide medical care, smoking-related illness
results in added medical care costs. (2)
- Cigarette smoking strikes down smokers in their working years,
thus bringing added welfare costs for supporting families which
have lost their wage earners.
- In developing countries, where educated, middle-class citizens
tend to be the heaviest smokers, death from smoking-caused disease
reduces the countries' leadership at the very age when they may
be making their greatest contribution to society.
- Developing countries produce 73% of the world's output of
tobacco. (13) While some land used to grow tobacco is unsuitable
for other crops, tobacco usurps the place of food crops that could
feed an estimated 10-20 million people. (14) This may lead to
the government having to bear the higher costs of imported food.
- Cigarettes cause at least one-quarter of all fires. The government
must therefore pay more for fire-fighting services. Also, it must
pay for the replacement of government-owned buildings, forests,
and other property lost to smoking-related fires.
- Government must pay more for maintaining the cleanliness of
government buildings and public areas littered with cigarette
butts, discarded packages, matchboxes and matches.
The Costs to Business
- Smokers are less productive workers because they are sicker:
they are absent from work more often and also die sooner than
non-smokers. New workers have to be trained to replace them.
- Smoking workers cause more accidents and fires than non-smokers.
- Workers interrupt their work to smoke, taking on average 7-10
minutes to smoke each cigarette-time often not spent working.
- Employers who provide health care, or health and life insurance
for their workers, must now or soon pay higher insurance rates.
- Smokers force businesses to spend more money to clean (or
replace) ventilating systems, smoke-stained walls and ceilings,
and on cleaning up ashtrays and other smokers' litter.
- Businesses which permit smoking bear an increasing risk that
courts or other authorities will rule that such employers are
financially liable for illness in non-smokers exposed to passive
smoking at work.
The Costs to the Individual Smoker and to the Smoker's Families
- In developing countries, the cost of buying cigarettes can
rise to over 25% of an individual's disposable income. This takes
money that could otherwise be spent on food, clothing and shelter.
- Many smokers lose wages from work days lost from smoking-related
illnesses.
- Since smoking often kills smokers in their working years,
smoking deprives the smoker's family of many years of income.
Following a smoker's premature death, a partner, children or elderly
parents may even be left destitute.
- Smoking raises the costs of health care necessitated by smoking-related
illnesses suffered both by the smoker and the smoker's family
who have been exposed to passive smoke in the home.
- Smoking affects smokers' family members in the time needed
to look after the smoker at home or to take him/her to hospital
(the latter may sometimes be measured in days in developing countries).
The Costs to the Environment
- Tobacco is mostly flue-cured by wood in developing countries.
It requires one acre of forest to cure one acre of tobacco. Already
in Tanzania, 12% of all trees felled annually are used for tobacco
curing. (15) Except where replanting programmes exist (virtually
all of which are totally inadequate), this destruction of forests
brings floods and threatens water supplies. (16)
- Cigarette wrapping, packaging and advertising involve the
heavy use of paper. A single cigarette manufacturing machine can
use 4 miles of paper per hour. (17)
- Other environmental aspects include smokers' litter, the use
of pesticides and herbicides on the tobacco crop, the environmental
impact of passive smoking and fires. One of the world's worst
forest fires, that swept north-east China in 1987, ravaged 1.3
million hectares of land, killed 300 people and made 5,000 people
homeless.
However, the value of human life is beyond costing. While economic
arguments are important, and must be answered, the rising death
toll from tobacco is an epidemic. No civilized country asks the
economic costs before it decides to fight an epidemic.
Acknowledgements
This information is condensed from a larger document: What
Tobacco Really Does to Your Country's Economic Health: An Advocate's
Guide to the Economic Arguments in Support of Tobacco Control
written by Dr. Judith Mackay and developed by the Advocacy Institute
for the American Cancer Society and the UICC. The American Cancer
Society funded the project.
References
- Death or Taxes. A Health Advocate's Guide to Increasing
Tobacco Taxes. The Non-Smokers' Rights Association, Canada
and The Advocacy Institute, Washington, DC, USA.
- Warner, K.E. Cigarette taxation; doing good by doing well.
Journal of Public Health Policy, 1984; 5 (3):312-319.
- Townsend, J.L. Cigarette tax, economic welfare and social
class patterns of smoking. Applied Economics, 1987, 19:355-365.
- Godfrey, C., Maynard, A. Economic Aspects of Tobacco Use and
Taxation Policy. BMJ, 1988; 297:339-343.
- World tobacco tax could help save millions of lives, says
study. Tobacco Alert, WHO; Series 1, Vol. 2, No. 4. Dec.
1984:1-2.
- Warner, K.E. Health and Economic Implications of a Tobacco-Free
Society. JAMA, 1987; 258, No. 15:2080-6.
- In: Tobacco Control in the Third World: A Resource Atlas.
March 1990. Eds. Simon Chapman and Wong Wei Leng.
- Ibid., pp. 35-6.
- Walker Merryman, US Tobacco Institute Vice-President. In:
City Newspaper, Rochester, NY, 16 Oct. 1986, pp. 1, 6-8.
- (7) Ibid. p. 49.
- "Tobacco economics" decried as sham by researchers
and WHO experts. Tobacco Alert, WHO, Series 1, Vol. 2,
No. 4, Dec. 84:3.
- Teoh Soong Kee. Smoking costs-a net loss. National ASH Seminar,
20-21 Oct. 1985.
- (7) Ibid. p. 27.
- Chandler, W.U. Banishing tobacco. Worldwatch Paper no. 68.
Washington, DC. Worldwatch Institute, 1986:20. In: Barry M. The
influence of the U.S. tobacco industry on the health, economy,
and environment of developing countries. NEJM, 1991. Vol.
324, No. 13:917-20.
- Taylor, S.A. Tobacco and economic growth in developing nations.
Business in the Contemporary World. Winter 1989:55-70.
In: Barry.
- International Forest Science Consultancy (IFSC) Report "The
use of wood by the tobacco industry and the ecological implications".
Dec. 1986;6.
- Nath, U.R. Smoking. Third World Alert. Oxford. Oxford
University Press, 1986:217.
March 1993
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