Increasing the price of “sin goods” like alcohol, cigarettes and sugary drinks will lead to a change in behaviour, with obvious health benefits to follow, states the Fiscal Review Committee.
In its recently-released report, the committee stated increasing the prices of alcohol, cigarettes and sugary drinks may force people to reduce or end their consumption.
“From a national viewpoint, luxury motor vehicles and other luxury goods are not necessary — but if people wish to make those purchasing choices (consistent with a free society and a market economy) at least they should contribute to the national treasury as they do so,” stated the committee.
“An argument was made to the committee by the tobacco industry that excessively taxing manufactured tobacco products (‘tailor-made’ cigarettes, which are easily taxed by ‘clipping the ticket’ as they leave the factory) risked driving consumers to unregulated forms of tobacco (for example suki, sold informally in markets and other ways, in a way that cannot be so easily taxed).
“These substitutes have equally damaging health effects but are harder to tax.
“So (by this argument) bad health outcomes remain unchanged while the excise duty revenue (the revenue needed to fund health care and anti-tobacco education) falls as consumers move to untaxed tobacco.
“The committee does not need to reach a view on that argument. Any conclusions on it should only be reached after testing the evidence. But it is an illustration of why the issues are not always straightforward.”
