The tax on cigarettes should be increased as the burden on the taxpayer is too high, even taking into account revenues from duty, a think tank said.
Policy Exchange called for a five per cent rise in next week’s budget – a rise of 23p for a pack of 20 – and further rises over the next five years to ensure smoking became ‘revenue neutral’.
It would mean the cost of a pack would rise by £1.29 to reach £7.42 over the course of the next Parliament.
The money could pay for health measures such as a £10-a-week ‘reward’ for pregnant women who give up smoking.
Research conducted by Policy Exchange found found that while tax on tobacco raised £10 billion a year for the Treasury, the annual cost of healthcare and other consequences of smoking totalled £13.74 billion.
That total includes £2.7 billion of NHS care, £2.9 billion lost in productivity during smoking breaks, the £342 million cost of cleaning up butts and £507 million spent putting out fires.
Lost productivity due to the deaths of smokers and passive smoking victims costs £4.8 billion and £2.9 billion is lost in increased absenteeism, their report – Cough Up – concluded.
A five per cent rise next week would, allowing for a consequent reduction in smoking rates, generate more than £400 million for HM Treasury – the think tank calculated.
Duty on hand-rolling tobacco should also be raised to a level ‘commensurate with cigarettes’ to prevent people switching, it said, suggesting it was undertaxed at present.
The report said a proportion of the revenue should be devoted to efforts to stop people smoking – with pregnant women the most prominent target to prevent children “inheriting” their addiction.
As well as a dedicated service in maternity units, it suggested, mums-to-be aged 20 or under should be offered a £10-per-week ‘financial incentive’ to quit – costing £36 million annually.
Another £10 million a year should be spent on media campaigns to boost take-up of the NHS Stop Smoking Service – only used by a tiny fraction of would-be quitters despite being highly effective.
And all patients should be offered the Champix (Varenicline) pill, which is currently only prescribed to one in five smokers trying to quit of cases despite being the ‘most effective and cost-effective treatment’, the report said.
Report author Henry Featherstone, head of Policy Exchange’s health and social care unit, said: “It is a popular myth that smoking is a net contributor to the economy – our research finds that every single cigarette smoked costs the country 6.5 pence.
“In order to balance income and costs, tobacco duty should be progressively increased until the full societal cost of smoking is met through taxation.
“As a start, the next Budget should increase tobacco duty by five per cent – this will reduce tobacco consumption by 2.5 per cent and provide an additional £400 million for the Treasury.
“A proportion of this extra revenue should be put towards helping people quit, and in particular reaching hard-to-reach groups like pregnant teenagers.
“Targeted action like this would help reduce England’s growing health inequalities, whereby those on lower incomes suffer more ill health, which can largely be attributed to smoking.”
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