Wed, Oct 08, 2003 - Page 8 News List

Cigarette tax can't stop people smoking

By Wu Ting-feng 吳挺鋒

Inter-party negotiations at the Legislative Yuan reached a consensus to make amendments to the Tobacco and Liquor Tax Law (菸酒稅法) to raise the health tax levied on cigarettes from NT$5 to NT$8 per pack.

Neither NT$5 nor NT$8 is big money, yet a 60 percent rise is quite startling. Those who advocate heavy taxes on cigarettes, however, may still not be satisfied about the increase. They stress again and again that cigarette prices in Taiwan are among the lowest in the world and it is necessary to control quantity via pricing, thus cutting down tobacco consumption in Taiwan. Such a stance is echoed by people in medical circles, who see smoking as a leading cause of cancer and blame heavy smokers for wasting medical resources. The current deficit in the national health insurance (NHI) system also seems to provide some legitimate grounds for the anti-smoking movement, as a government official revealed that the increased revenue from the tax on cigarettes would be used to help fund the NHI system.

These arguments sound quite familiar. However, if we treat the health tax levied on cigarettes as a way of reducing the government's financial burden, then the good moral image of the health tax would be completely lost and the 60 percent increase in the tax could be seen as looting by the government.

A majority of tobacco consumers come from the working class. Increasing the tax on cigarettes will not help promote fairness and justice in our financial system. Instead, it will make it more unfair. Laborers are not high-income earners and have no way to dodge their tax duties. And now they have to shoulder another tax imposed on them indirectly.

Besides, the concept of controlling quantity via pricing does not apply to consumer behavior in tobacco products. The need for tobacco products endures, and few consumers would reduce their consumption of cigarettes because of higher prices. The same behavior can be found in betel-nut consumption, which continues to see great demand despite a sky-rocketing prices. Therefore, raising the health tax levied on cigarettes simply entitles the government to enjoy extra income in the name of preserving the public's health.

It is worthwhile noting that from ethical, medical and NHI perspectives, the best way to control consumption is through price. They all mistakenly individualize the issue of tobacco consumption rather than treat it as a social issue. The smoking habits of the working class have a lot to do with their working conditions and life style.

Strictly speaking, if we really want to curb smoking or cut down the use of medical resources, we should first deal with the cruel structural reality that Taiwanese work more hours every year than anyone else in the world. The mainstream anti-smoking ethic ignores this fact and worships the control of quantity via pricing. As a result, tobacco consumers often fall victim to criticism and the NHI is being treated like a commodity. For example, in an attempt to control quantity via pricing, the NHI has raised premiums, forcing the main users of the service, namely the elderly, handicapped and laborers, to pay more for their medical needs.

The cigarette issue exemplifies Taiwan's mainstream discourse, which worships the market economy in controlling quantity via pricing, making Taiwan's social security system tilt to the right. This, of course, also reveals that fact that the health tax is healthy only in name, as it badly distributes wealth in a form of a regressive tax [ie, the poorer you are, the more tax you pay]. Under such circumstances, the 60 percent tax hike would continue the class inequality in Taiwan's wealth distribution.

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