Economics of Tobacco Control

Public health and economic effects

Serious part of the expenses of smokers and their family comes from the money spent for cigarette. This amount could be spent for more important things, e.g. food, education, clothes.

Owing to the smoking related death of one fourth of smokers in their active ages, their families get into existence insecurity. Morbidity also cause loss of income, because the nursing of the patient (weather a smoker or family member suffering from passive smoking, especially children) can take more weeks/months. In some countries smokers have to pay higher amount for health and home insurance.

As the consequence of smoking, mortality and morbidity rates are bad, and negatively affect the economic development of the country.

According to the regularly reported arguments of tobacco industry, cigarette consumption –owing to the excise duties of tobacco products – takes great part of economic income of some countries. It creates and carries on jobs and supports the economic development with this. Among these arguments the less known expenditure of smoking related negative effects is not mentioned.

Field good for food production is used for tobacco production. Improvident smoking can lead to fire. Tobacco industry supports deforestation, because paper is used in cigarette production. Work performance decreases due to frequent diseases.

In the European Union expenditure of smoking reaches the 98-130 milliard Euro per year, which is equal to the 1,04-1,39% of GDP of the EU in 2000 (1).

According to an impact assessment prepared for a proposal concerning Council recommendation on smokefree environment, exposure of environmental smoke cause serious financial burden as well.

By the estimations, exposure of tobacco smoke in workplaces in EU27 means 2,46 milliard EUR macroeconomic burden. (2) This amount comes from more than 1,3 milliard EUR health care expenditure for smoking related diseases (including more than 560 million EUR for the health care of non-smoker employees), and from more than 1,1 milliard EUR concerning non-health care expenditures  and loss in productivity (involving 480 million EUR regarding non smoker employees).

Microeconomic burden from exposure of environmental tobacco smoke includes expenditure from the lower productivity of employees, the fire caused by instruments used for smoking, and smoking related cleaning and reconstruction.

Participants of the “High level round table on tobacco control and development policy” (3) of the European Commission in 2003 came to the conclusion that one of the basic influential element in a country performance is the level of success in tobacco control.

According to the tableprepared to present the impact assessment results of leader countries in tobacco control in 2011, implementation of measures worth for all countries in the word.

Hungary

In 2006 smoking related social burden was calculated by the research of the GKI Economic Research Co. using internationally recommended methodology, mortality and morbidity data from 2004. According to this, in 2004 around 23 000 citizens over 35 years died because of smoking in Hungary. Nearly every third men over 35 years (30%) died due to smoking. Expenditure is half direct and half indirect. Drug expenditure, the disability pension, impatient care, and loss of income owing to diseases are high expenditure.

This means that in 2004 1,7% of GDP lost due to smoking in Hungary.

Barta J, Szilágyi T, Tompa T: Social expenditure of smoking, effects of tobacco taxes.

Passive smoking caused 2300 death in age group of citizens over 35 years in 2004 and the 17 million HUF damage is also high although its expenditure takes „only” the 0,1% of GDP.

Barta J, Szilágyi T, Tompa T: Social expenditure of smoking, effects of tobacco taxes.

According to conservative estimations, active and passive smoking caused 379-397 milliard HUF expenditure in the budget in 2004. In the same year the State got 257,8 milliard HUF income from the excise duty (183,9 HUF milliard) and VAT (73,9 milliard HUF). It was less with 120 milliard HUF, than the amount spent for smoking of the citizens.

Unfortunately prevalence of smoking was unchanged in 2010, thus these rates are still right for 2010. According to the research of the Word Bank and WHO, smoking costs 2-8 times more, than the income (excise duty, VAT) from it in the word.

In Hungary the multiplier is 1,5-2. According to the WHO document about the heath care expenditures, the measures in favour of non-smokers protection are the most cost-effective solutions everywhere.

Curbing the Epidemic: Governments and the Economics of Tobacco Control
Copyright © 1999 by The International Bank for Reconstruction and Development/The World Bank
1818 H Street, N.W. Washington, D.C. 20433, U.S.A.

A világméretű járvány megfékezése: A kormányzatok szerepe és a dohányzásellenőrzés gazdaságtana
Copyright © 2000 Nemzetközi Újjáépítési és Fejlesztési Bank /Világbank
1818 H Street, N.W. Washington, D.C. 20433, U.S.A.