Smoking and drinking ‘save public purse money’

9 Aug 17

Alcohol and smoking are not a drain on public finances and actually provide a net benefit of £22.8bn, according to a study by the Institute of Economic Affairs.

The free market think-tank published its latest installment in a three part series of reports, which claims to debunk the view that alcohol, obesity and smoking cost the public purse.

The Guardian has previously reported the IEA has received funding from tobacco firms. Although, the think-tank told Public Finance it could not affirm or deny this. 

Taxes levied on 'lifestyle factors' analysed in the report provide a net gain to the government, the organisation argued. 

Only obesity has a net cost £2.5bn a year but this will drop to £2bn once the sugar levy is introduced, according to the IEA’s analysis. 

The Smoking and the Public Purse report argues that the government spends £3.6bn treating smoking-related diseases on the NHS and up to £1bn collecting cigarette butts and extinguishing smoking-related house fires.

The government saves £9.8bn annually in pension, healthcare and other benefit payments due to premature mortality, the IEA said.

Meanwhile, the government brings in £9.5bn a year in duty paid on tobacco, the IEA said. Suggesting this means smoking produces a net saving to public finances of £14.7bn a year, at current rates of consumption.

The study stated: “It may be easy to point the finger of blame at smokers, drinkers and the obese for rising NHS costs, but this no longer stands up to scrutiny given the findings of this report and the levels of taxation now levied on ‘sin’.

“And by scapegoating these people, campaigners and policymakers risk ignoring the real problem that our healthcare system faces: an ageing population.”

The institute’s previous studies asserted that the gross cost to taxpayers of dealing with matters related to drinking, such as healthcare and expenditure on policing, is £4.6bn per annum.

Taxes on alcohol earns the government £10.7bn annually resulting in a net benefit of £6.1bn.

Report author Christopher Snowdon, head of lifestyle economics at the IEA, said: “We are constantly being told that people who choose to drink, smoke or eat too much are a burden on the UK taxpayer.

"This is one reason why we have seen such aggressive hikes in taxes on alcohol, smoking and very soon, a tax on sugar. But the justification for these taxes is based on an illusion.

“Smokers, drinkers and those who are obese actually provide a net benefit to the public finances, so vilifying them is futile in the quest to make savings for the NHS.”

He urged the government to address financial consequences of an ageing population and abandon what he said was the popular but “false” belief that costs will fall if people live healthier, longer lives.

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