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Taxes to reduce incentives to sell cigarettes to youth?

Michael Adams in The Economist’s Voice argues that tobacco companies should be taxed additionally to recoup the statistically-estimated costs of smoking by minors (subscription required). This would mean that cigarette producers would have no incentives to promote their products to young people and since most people start smoking at age 18 or less (the average age in Australia is 15.9 years) this would substantially reduce smoking.

I wonder if this is a sensible suggestion. In most developed countries there is no opportunity to market to minors since advertising of cigarettes is banned or should be.  In most countries also sale of cigarettes to minors is prohibited with hefty potential fines.  In Australia a substantial level of cigarette sales to minors still does occur which suggests that penalties and enforcement are not up to scratch.

Moreover the only effects here are supply effects when one really needs to deal with demand by young potential smokers.

Over the years I have made a number of proposals to eliminate smoking within a generation by confining smoking to those already addicted.

My suggestion is to register cigarette users as nicotine addicts and to make cigarettes legally available only on the basis of a GPs prescription that would require a cotinine test. To reduce the outrage that smokers might register at this suggestion the current excise on cigarettes should be held fixed for a few years. Then it would again increase.

Supplying cigarettes to those not authorised to smoke should be considered in the courts as supplying a dangerous drug and hefty fines should be imposed.

Current cigarette bans should be intensified to exclude all smoking that has any impact at all on non-smokers.  Smoking in all buildings and in cars with children is now banned in most states.

Duty free cigarettes should not be admitted into Australia and visitors who smoke should be able to bring only a few packets of cigarettes with them and perhaps a permit to purchase cigarettes for up to a two-week period from pharmacies.

Migrant applicants who reveal, through cotinine tests, that they are smokers should not be considered for entry to Australia. We can achieve a less socially-costless migrant intake by excluding smokers.

Of course the anti-smoking message should be pursued by the media and subsidised health and quit campaigns – particularly directed to indigenous Australians – should continue to be part of the policy mix. Firms should be encouraged to help smoking employees quit the habit and health insurance companies should charge a substantial premium to ensuring smokers.

That package of policies should get rid of smoking in one generation.

3 comments to Taxes to reduce incentives to sell cigarettes to youth?

  • John Mashey

    1) Raising prices is useful (I think there is plenty of data on thaqt), but “no incentives to promote their products to young people”?

    I don’t understand that, cigarette companies *know* the only way to have customers-for-life is to get them addicted as teens. If they could figure out how to give them away to kids in some way not to have them reach the broader market, they would, i.e., as loss leaders to maintain customer base.

    Of course, they target folks in lower socioeconomic groups.

    “In most developed countries there is no opportunity to market to minors since advertising to minors is banned or should be.”

    Well, “should be” I might believe.

    Tobacco Free California lists some of the issues, and CA is one of the strongest anti-smoking states in the US. One could forbid many forms of *advertising* and they’d still do *marketing*. Convenience stores still have cigarettes, and kids still get them by having older friends buy for them, or the rules aren’t strictly enforced, especially in lower-income neighborhoods.

    Indeed, your proposal makes more sense … and cigarette companies would fight it to the death, of course.

  • Uncle Milton

    Harry, your proposals, while well intended, will simply drive tobacco consumption underground, like heroin consumption. The result will be 1/2 the cops in Australia will be chasing unlawful tobacco suppliers and buyers, and the other 1/2 will be taking bribes from the unlawful tobacco suppliers and buyers.

    I’m all for eliminating tobacco consumption, but governments can only go as far as the community will let them.

  • hc

    Uncle Milton, The only controversial bit is the registration of nicotine as a pharmaceutical. These can be motivated as I say by providing cigarettes at relatively low cost on the basis of medical prescriptions.

    An attractive feature of the proposal is that it accurately describes the nature of cigarette consumption.

    Illegal supplies of tobacco in Australia will dry up when the domestic supply of tobacco ends as is shortly due to happen.

    No you don’t need half the police in Australia chasing illegal supplies just enough to keep illegal prices well above legal prices.

    You are targeting a relatively small market – 100,000 or so youth who are taking up the habit annually. This group have relatively elastic demands and their participation decisions would be significantly impacted by a substantial increase in price.

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