ASH Scotland's 11+ Maths And The Futility Of Tobacco Tax Hikes

I haven't yet passed comment on this week's laughable 'study' by ASH Scotland claiming that smoking costs the Scottish economy £1.1bn, for three reasons.

1) Because it's been a busy week.
2) Because others tackled it admirably, and ...
3) Because I've kinda rubbished it once already.

Not following me? OK, let me explain with reference to the handy list of 'costs' broken down by Simon Clark.

- £271m in direct NHS costs of treating smoking-attributable disease
- £692m in productivity losses due to excess absenteeism, smoking breaks and lost output due to premature death
- £60m in lost output to premature deaths due to second-hand smoke in the home
- £34m in cleaning cigarette litter from the streets
- £12m in fires caused by smoking in commercial properties

Now let's look at the dog's dinner collated by Henry Featherstone - ASH's useful idiot at Policy Exchange** - earlier this year.

Research conducted by Policy Exchange found that while tax on tobacco raised £10 billion a year for the Treasury, the annual cost of healthcare and other consequences of smoking totalled £13.74 billion.

That total includes £2.7 billion of NHS care, £2.9 billion lost in productivity during smoking breaks, the £342 million cost of cleaning up butts and £507 million spent putting out fires.

Lost productivity due to the deaths of smokers and passive smoking victims costs £4.8 billion and £2.9 billion is lost in increased absenteeism, their report - Cough Up - concluded.

You may have noticed that the two sets of figures bear something of a relationship. That's right, ASH Scotland's figures are simply Featherstone's poppycock divided by ten. I presumed from this that Scotland's population was probably roughly a tenth of that of the UK, and lo and behold, on googling it, yes it is! (England, Wales and NI total 55m, Scotland 5.2m)

ASH Scotland's litter clearance and NHS costs figures are exactly 10% of Featherstone's nonsense, while productivity losses are 10% of those Featherstone came up with less his £713m attributed to passive smoking (treated differently by ASH), and the passive smoking figure itself 10% less a bit for residual 'passive' exposure outside the home.

The only stat that differed from this golden rule was for fires, perhaps due to domestic ones being omitted. No doubt because such claimed costs are too easily shot down, as Mark Littlewood at the IEA unerringly did in the Spring.

With regard to house fires, buildings insurance companies – just like life insurance companies – are certainly entitled to charge higher premiums to smokers if they wish. The fact that they do not suggests that the risk is too trivial – why should the government step in and over-rule them by collecting extra taxes on cigarette smokers to cover the costs of extra house fires.

In short, ASH Scotland's 'study' was a simple case of thinking of a number based on Featherstone's garbage from March. And it wasn't too difficult to find the (deliberate?) over-stating of costs and childlike mathematics in that when I looked into it at the time.

So, armed with a calculator to divide everything by ten, and a copy of Featherstone's pdf, ASH's report could have been drafted in about an hour. In fact, Featherstone could have brought the copy himself, as he was acknowledged for his help on page 2.

And for back-of-a-nicotine-patch-packet stuff like this, ASH Scotland have been funded by taxpayers to the tune of at least £1.42m in the past two years. Quite a racket, doncha think?

So, what of the resultant demands of this report from ASH Scotland's tax-scrounger-in-chief, Sheila Duffy?

The Ash Scotland chief executive called for cash to be put into services to help smokers quit and also said tobacco duty should be increased.

Past experience should have told 'handout' Duffy that such taxes simply don't yield the increase in receipts she claims her squealing is designed to facilitate.

In fact, the very day after her report was released, concrete proof of its failure as a tax-raising measure was being reported in New York.

Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found.

[experts say] sales have simply shifted to nearby tax havens that allow New Yorkers to stockpile cut-rate smokes at the expense of the state treasury.

Both Pennsylvania and Vermont, which each have significantly lower cigarette taxes, have seen tobacco sales rise since New York's hike, [...] as well as tax-free Indian reservations in western New York and on Long Island.

The increase has brought in only $13.8 million a month, according state sales figures, which means the plan could be as much as $136 million in the red by March 31.

"That's what we warned would happen, and obviously it has come to fruition," said James Calvin, of the New York Association of Convenience Stores.

"Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating."

How Duffy thinks Scotland is going to be any different, only the sugar plum fairy she obviously discusses economics with every night knows.

So, in summation, what we have here is a shonky study a 10 year old could produce, referencing discredited data from a policy wonk who struggles to hold a calculator the right way up, to bring about a tax rise which won't bring in extra revenue, but will harm scottish business and increase smuggling and cross-border sales.

Congratulations Holyrood and the Lottery, that was £1.42m well spent, wasn't it?

** Well, he used to be at Policy Exchange but now seems to have been replaced - was it something he wrote?