In 2009, cigarette tax revenue passed the billion-dollar mark. In the 2015-16 tax year it rose to $1.72 billion, up from $1.45 billion the previous year.
This annual increase in total tax revenue is actually greater than can be explained by the percentage increase in the tax rate, which could means one of three things:
(1) There are more smokers;
(2) Existing smokers are smoking more'
(3) If smoker numbers are going down (as Prof Edwards says) then the remaining smokers are smoking excessively more.
Another option is that smokers are lying when surveyed about their habit (as I do) making it difficult to ascertain the true numbers. There are either some holes in Prof Edwards' research or he has created figures to tell the government what they want to hear.
He also incorrectly claims: "The burden on the health system still outweighs the tax revenue", adding "In 2010, direct healthcare costs generated by smoking-related illness were estimated at $1.9 billion annually, compared with tobacco tax at the time of $1.3 billion."
Another paper (report on Tobacco Taxation in New Zealand, 2007, by O'Dea, Thornton, Edwards and Gifford) calculated total health costs in 2005 at $1.5 billion.
Closer examination of 2005 figures reveal that of the $1.5 billion, the "direct healthcare" costs were only $350 million, around 25 per cent of their calculated total costs to the state.
The other 75 per cent is actually creative accounting - for example, lost production due to mortality and morbidity even though this cohort is generally retired and no longer "productive" when they get sick or die; and there is no acknowledgement of savings in pensions and expensive healthcare for people in the last few years of life.
The Taxpayers Union charitably puts health costs to the state from smokers at about one third of the tobacco tax take and even the New Zealand Treasury acknowledges the tax is well in excess of health costs.
The methodology used by some researchers to calculate the cost cigarette smoking purports to be based on sound statistical analysis. Closer examination reveals a pseudo-science with numbers thrown in to come up with what the government (who is paying for the research) wants to hear.
In recent weeks there have been armed hold-ups in Whanganui - and around the country - where the thieves targeted cigarettes. Prof Edwards may be tempted to call the costs of capture and imprisonment of the offenders another tobacco-related cost to the state but you would truly have to be an ideologue to believe that.
In one of his columns our local MP Chester Borrows did some hand wringing about the ever-growing Maori prison population. Over the holidays Chester may like to reflect on the relationship between cigarette taxation rates and the prison population.
As of this year, 20 per cent of the price of a packet of cigarettes goes to manufacture, supply, distribution and retail; the other 80 per cent is tax (excise tax and GST) and this accounts for 1.4 per cent of total government revenue.
Tobacco excise tax is set to rise by another 10 per cent on January 1 next year - happy new year smokers!
*When Fred Frederikse is not building, he is a self-directed student of geography and traveller. In his spare time he is co-chair of the Whanganui Musicians Club
