It’s a great movie if you haven’t seen it.
Today David Leyonhjelm thanked smokers for their contributions to treasury in a speech to the parliament.
A crossbench senator has thanked Australia’s smokers and attacked successive governments for increasing tobacco taxes in a speech in Federal Parliament.
Liberal Democratic Party Upper House representative David Leyonhjelm voiced his gratitude to smokers for the $8 billion they provide in tobacco taxes each year.
“Your generosity to the nation’s Treasury is truly staggering,” he told the Senate.
The ABC is in shock.
At the time, former Labor prime minister Kevin Rudd argued the increases were necessary because tobacco-related diseases cost more than $31 billion to the national economy annually and cause 15,000 deaths each year.
The Federal Government’s Quit Now website lists the habit as the largest cause of death and disease in the country.
It estimates 50 people die from tobacco-related illnesses each day in Australia.
They are probably not used to hearing an alternate perspective on this and so many other matters.
The Henry Review identified ten taxes that raised 90 per cent of total Australian tax revenue. Tobacco excise is one of those ten.
Anyway – I graphed the percentage of tobacco excise to federal health expenditure over the past few years and going forward. Data from 2007-08 are from the Final Budget Outcome for each year, while the data from 2014-15 to 2017-18 are from this years Budget Papers.
Smokers pay for a lot of Australia’s health budget (of course the excise revenue goes into consolidated revenue first) and that is before we consider what they pay in terms of the income tax, medicare levy, and so on.
Non-smokers are clearly being cross-subsidised by smokers.*
Now we can quibble if that is a good or bad thing. What is happening is that the health lobby want to get their hands on that loot and be in a position to spend that money themselves rather than have it go into the consolidated revenue pot and get allocated to the benefit of all Australians (to the extent that government spending benefits anyone).
As we reported last month the WHO are having an anti-tobacco conference this month in Moscow – no talk of a anti-Putin boycott as far as I’m aware – and one of the proposals is for tobacco excise to increase to 70% of retail price and for that money to be spent solely on tobacco-control programs. By that we should read the anti-tobacco lobby gets to spend $8 billion to $10 billion each year given each other research grants and the like.
Now Australia hasn’t signed up to that – but can we be sure that some health department official won’t sign up to that “aspiration”, and so obligate the Australian government into a promise to divert a subsidy from smokers to non-smokers into a subsidy from smokers to public health officials? Without some clear guidance from the government a fairly low-level official in a spending portfolio might just get to reallocate one of Australia’s big tax bases.
* no doubt someone is going to point to the $31 billion figure that Kevin Rudd is quoted as having bandied around. See Eric Crampton demolish that number here.
Update: Speech here.