In its report, the Treasury says smokers often die earlier than non-smokers and save the state in superannuation costs.
Treasury says smokers pay $1.3 billion a year in excise which may already exceed the direct health costs they impose.
The report then goes on to consider broader economic questions. It says smokers' shorter life expectancy reduces superannuation and aged care costs, meaning they are already "paying their way in narrowly fiscal terms"
The Treasury’s most recent guidelines (2009) for contracts with non-governmental organisations also make it clear: “Government agencies should also be careful to ensure that contracts do not breach public service standards of political neutrality”.
However, the Health Ministry is still funding the “advocacy” and “awareness raising” that these organisations engage in. The Ministry still funds ASH and other organisations like the Public Health Association – it is just more careful about what it puts in the contracts.
The current ASH contract allows it to “liaise with government and private health agencies, the media and any other appropriate organisations to raise public awareness of tobacco related issues and developments”. It says it will “prepare and distribute media briefings, commentary and releases on key tobacco issues. This will include maintaining relationships with key media.”
A quick look at the ASH website makes it clear it is a lobby group, but a lobby group that gets 89% of its funding from the taxpayer
For governments, tobacco-tax policy remains a hornet’s nest, and there are no easy answers. On one hand, health groups favour still-higher taxes and stronger enforcement. On the other hand, legal producers and distributors favour reduced taxes with stronger enforcement.
This raises the following question: could lower tobacco taxes drive out the illegal product by inducing smokers to switch from illegal to legal cigarettes, and at the same time increase tax revenues?
Assuming individual smokers’ basic preference for legal products, tobacco-tax reductions would likely only create a modest drop in consumption of the illegal product,lead to a decline in tax revenues and result in a small increase in total consumption. The market share of the illegal product would fall more substantially were the price of the illegal product to rise as a result of stronger legal or enforcement pressures on suppliers.