The UK Government's Unhealthy Profit in Tobacco: Are they Interested in Wealth or Health?
James Marsden | 27 March 2017

It was in 1492, after Christopher Columbus had been offered some dried tobacco leaves that people began to grow this plant in Europe. The widespread growth of the tobacco industry in Europe was primarily fueled by the false belief that tobacco contained useful healing properties, believed to cure a range of health problems such as cancer. It was only until the mid 1950’s that the health hazards that came with smoking were revealed. By that time, however, it was too late for governments to ban smoking completely (due to the addictive nature of the drug) and so governments began to regulate the advertisement and sales of tobacco products.


Today, close to one in five adults in the UK smoke cigarettes (it is estimated that 9.4 million adults were smoking in 2013). Smoking is the biggest cause of death and illness in the UK, with more than 120,000 people dying per year from smoking related diseases. Approximately half of all (consistent) smokers die prematurely, usually after undergoing a variety of medical treatments. Current research suggests that smoking costs the NHS around £2.7 billion every year. In addition to these extensive NHS costs, the government is also paying more indirect costs (such as for fires caused by smoking related equipment).


One of the major economic costs caused by large numbers of people smoking is the loss in productivity among the workforce; workers become ill and have days off due to minor smoking related illnesses. The cost of this loss in productivity is very difficult to quantify in terms of money, although it is clearly a financial burden to the UK economy. These more indirect costs are estimated to be at least double the cost that the NHS is spending on smoking related healthcare.


Considering the sizeable financial and ethical damage that smoking does, this may lead one to question why there is not an intensive effort from the government to discourage the public from buying tobacco products… Or is there?


The Government is estimated to be making a tremendous £12 billion directly from tobacco sales. On average, 80% of the money paid for a pack of cigarettes goes to the government (in the form of tax).


The government justifies the high taxation of cigarettes by claiming it reduces the number of people buying tobacco products and hence reduces the costs caused by smoking to the government and saves lives.


It seems senseless and possibly even immoral, that the government wouldn’t increase tax on tobacco even further, in order to reduce smoking to an absolute minimum. The reason for this, some would argue, is the huge contribution to the economy that tobacco brings, besides the money contributed directly from tax (which massively outweighs the cost to the NHS and the indirect costs caused by smoking). The tobacco industry does not just accumulate a huge amount of money for the government through the sales of tobacco, but also has a range of indirect benefits to the UK’s economy. An obvious benefit would be the number of jobs the tobacco industry provides: 70,000 people’s jobs rely on the UK tobacco industry. The employment generated here also generates more income tax and through the multiplier effect creates further jobs and economic activity in its supply change.


In addition, other industries which produce goods that complement tobacco products, such as lighters, benefit greatly from the tobacco industry and help to boost the UK’s economy. Yet, of all the industries that benefit from tobacco, the UK’s pharmaceutical industry benefits the most.


The pharmaceutical industry is one of the UK’s most valuable industries; contributing a relatively large proportion of the UK’s jobs and GDP. If the numbers of people smoking were to fall, the demand for medications to treat ailments and diseases would plummet significantly, damaging the profits of pharmaceutical companies.


Another slightly more controversial theory as to why the government doesn’t raise taxes on tobacco, is that the government will not have to fund pensions for as many smokers because they may already be dead by the retirement age. This is often the case for more frequent smokers: a life of paying income tax followed by a premature death, right before start claiming their pensions.


To conclude, it is unquestionable that the government is making a very satiating profit as a result of the prospering tobacco industry. The government’s ambitions, regarding whether they prioritise public health or the UK economy, remain ambiguous.


It is apparent that the government has made an attempt to reduce the numbers of people smoking, mainly in the form of ‘stop smoking services’, ‘smoke-free homes and cars’ and regulations that make it a requirement to advertise the health risks and consequences of tobacco products. On the other hand, a cynic might argue that these attempts to reduce smoking are purposely ineffective, with the intention of giving the public the impression that the government believes that the citizens’ health comes before the UK economy’s health. This argument would suggest that the government is using these shallow yet very much publicised attempts to reduce smoking, in order to disguise the hefty profits made by this addictive product. Furthermore, I believe it is necessary to consider that the costs to the government through the NHS might possibly be overstated. I believe this may be the case simply because almost everyone receives treatment before their death, and so smokers would have claimed their treatment eventually regardless of whether they had smoked or not.


Personally, I think that the government is more interested in satisfying their budget, rather than confronting the ethical problem of dying citizens. Nonetheless, I do credit the government for having a very slight positive impact on reducing the number of people smoking, but only as a by-product of making such vast tax revenues.

James Routledge 2016