Why we should cut alcohol and tobacco taxes and why we can’t


The socioeconomic profile of drinkers and smokers across countries are similar. Smoking and drinking is more prevalent amongst the less fortunate, the disadvantaged and the uneducated. In the UK, it is no different. Hiscock, Bauld, Amos & Platt (2012) found that smoking rates were four times higher amongst the disadvantaged versus the more affluent (60.7% versus 15.3% - the factors that determined disadvantage included unemployment, income, housing tenure, car availability, lone parenting and an index of multiple deprivation). Fone, Farewell, White, Lyons & Dunstan (2013) found that “respondents in the most deprived neighbourhoods were more likely to binge drink than in the least deprived (adjusted estimates: 17.5% versus 10.6%...)”. Clearly, the incidence of these taxes falls disproportionately on the disadvantaged.

People often smoke and drink for pleasure; this means that these taxes stifle those with fewer resources from attaining pleasure. Conversely, affluent people generally have less trouble substituting consumption goods or in quitting substance use altogether. This prevention of stress alleviation and pleasure attainment will be reflected in sub-potential labour productivity.

The Biopsychosocial model of health suggests that any biological health benefits could be offset by the emotional and financial strain that these taxes induce. The situation is worse for those who are both addicted and poor since they substitute consumption even less than their poor, non-addicted counterparts (thereby reducing their consumption of other important goods). This simultaneously deprives their dependents (quite often children).

A primary concern is that the increase in smoking and drinking will cause several negative externalities (especially in the form of increased healthcare costs). One should consider that, if a drinker or a smoker is aware of the threat of liver failure or lung cancer and yet they choose to ignore it, it is ultimately their choice, their body and their health. A certain degree of respect must be afforded to choice especially since we cannot fully empathise with others.

However, one’s disregard for one’s own health often incurs costs for taxpayers whilst, personally, there are negligible financial costs. In this sense, many may feel disinclined to take care of their health as they might have if treatments weren’t free. So whilst the NHS is still around in its current form, it makes (some, albeit limited) sense to heavily tax alcohol and tobacco. Alternatively, a healthcare system that is at least partially privatised (e.g healthcare vouchers) would enable lower taxation of the disadvantaged and impoverished.