In 2001, the Czech Republic attempted to raise the excise tax on tobacco to reduce the number of people who smoked in pursuit of greater health in the general population. Unfortunately, with very little social sensitivity, the tobacco company Philip Morris had no better idea than to commission a study showing that smokers benefited the Czech economy.
Their studies showed that smoking indeed increases health care costs, but at the same time, the central government benefits from taxes on smoking sales and early deaths that reduce future health care, retirement, and housing costs. This, according to the Philip Morris study[45], gave the Czech state a net gain of US$ 147 million based on its smoking population, savings of US$ 1,227 for each premature death due to smoking.
As for Argentina, the most recent information I found while writing this book was a Ministry of Health report regarding the 2017 tax reform, including data on tobacco-associated products[46]. The same points out that a study by the Institute of Clinical and Health Effectiveness concluded that per year, there are 44,851 deaths, 20,620 cancer diagnoses, 14,405 strokes, and 68,100 hospitalizations for cardiovascular diseases that can be attributed to smoking in Argentina. These estimates include a set of pathologies with a burden attributable to smoking. The same study points out that the cost of attending to these health problems caused by smoking reached 33 billion pesos in 2015, equivalent to 0.75% of the nation’s GDP. Considering that the total health expenditure represents between 8% and 10% of the Argentine GDP, we can assume that between 7.5% and 9.4% of that expenditure would be caused by smokers’ habits. Is the money from tobacco consumption taxes enough to cover these expenses? Unfortunately, the tobacco industry doesn’t even meet such satisfaction in my country. While in 2015, only 8 pesos per pack were collected in taxes, the health impact of a box of cigarettes was around $16 for each pack sold. In turn, while updated and estimated health costs for 2016 and 2017 were calculated at $41,118 million (approximately $23 per pack) and $51,398 million (approximately $28 per pack), respectively, selective taxes per pack only provided $15 and $21, respectively.
Health cost attributable to tobacco versus what taxes on each pack of cigarettes sold contribute to state revenue
[45] Philip Morris.(2000). Public Finance Balance of Smoking in the Czech Republic [Ebook] (pp. 1-29). Viewed June 23, 2021, at https://lo.unisa.edu.au/pluginfile.php/1202751/mod_book/chapter/121764/Topic%203%20-%20readings%20-%20pmczechstudy.pdf.
[46] Ministry of Health. Presidencia de la Nación. (2018) Analysis of tobacco product tax reform in Argentina. Advances and challenges for public health (p. 6). Viewed on June 15, 2021, at https://bancos.salud.gob.ar/sites/default/files/2018-10/0000001110cnt-2018-02_informe-impacto-aumento-impuestos-tabaco_preliminar.pdf.