Recommendation to the Minister of Finance to
tax tobacco in line with the death risk
Tobacco tax rates are currently levied
as a flat 35 cents per gram of moist tobacco. To align the tax rate
with the mortality risk of using each class of product, and the
moisture content, would result in these changes:
~~Cigarette tobacco (RYOs):
Double the excise rate from 35 cents to 70 cents a gram.*
~~Cigarettes, cigar and pipe tobaccos:
Leave unchanged at the current 35 cents a gram.
~~Snuff: Decrease the tax rate 90%,
from 35 cents to 3 cents per gram.
- Table 1 suggests increase by a
factor of 2.2. Recommendation based on doubling for
simplicity.
FACT:
THE CURRENT EXCISE RATE IS FLAT ACROSS ALL TOBACCO PRODUCTS
BUT THE DEATH RISK VARIES GREATLY BY PRODUCT CLASS
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Figure 1. Flat excise tax rate and the
variation in mortality risk across tobacco products
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Excise rate dates from Dec.
2005. For most recent rate, see www.customs.govt.nz
Risk estimates
Cigarette smoking risks: Bjartveit K, Tverdal A. Health consequences of smoking 1-4
cigarettes per day Tobacco
Control 2005; 14: 315-20, based on follow-up of 43,000
Norwegians from 1970s to 2002.
Cigar smoking risks: Cigars, health
effects and trends. Monograph 9, National Cancer Institute USA,
1998, based on
follow-up of 1 million US subjects for 12 years, including 22,000 cigar smokers, in
Cancer Prevention Study I, 1959-72. Adjusted for the inhalation
rates in cigar only smokers (the majority) and cigar smokers who
formerly smoked cigarettes.
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Comment: The tobacco excise rate should by
proportional to the death risk, to encourage continuing tobacco
users to switch away from the most dangerous types of tobacco product.
FACT: THE RISKS VARY GREATLY BY
TOBACCO PRODUCT AND HOW IT IS USED
Figure 2. Relative mortality risk from
smoking, inhaling, snuffing, or abstaining from tobacco
Sources:
Cigarette smoking risks:
Bjartveit K, Tverdal A. Health consequences
of smoking 1-4 cigarettes per day
Tobacco Control 2005; 14: 315-20, based
on followup of 43,000 Norwegians from
1970s to 2002.
Cigar smoking risks: Cigars, health
effects and trends. Monograph 9, National Cancer Institute USA,
1998, based on follow-up of 1 million US subjects for 12 years, including 22,000 cigar smokers, in
Cancer Prevention Study I, 1959-72.. Chewing cigars lit or not, is
less dangerous than living with a smoker (who smokes inside),
provided the smoke is not inhaled into the lungs.
Second hand smoke risk: Hill S,
Blakely T, Kawachi I, Woodward A. BMJ
2004 988-89 (24 April). Based on fate of never smokers whether
living with a smoker or not in 1996 NZ census.
Risks of snus Taking tobacco by
mouth (snus) involves a small residual risk, at least 10 times less
risky than cigarette smoking. Levy DT et al. Cancer Epidemiology,
Biomarkers and Prevention 2004; 13: 2035-42; estimated on NZ data
at 5% of cigarette risks.
Risks of nicotine gum. Taking
nicotine by mouth carries zero extra risk. Murray RP, et al. Safety
of nicotine polacrilex gum used by 3094
participants in the Lung Health Study. Chest 1996; 109: 438-45. Followed
for 5 years, compared with 1900 controls. No increase in
hospitalization or mortality in the nicotine gum chewers.
CIGARETTES ARE MUCH MORE DANGEROUS
THAN CIGARS
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Figure 3 . Cigarette and cigar
smoking risks of dying early compared with not ever smoking.
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- This graph compares the
risks of smoking cigarettes with all cigar smokers,
including those who inhale the cigar smoke.
- The cigar smokers who have
been cigarette smokers have increased risk due to their past
cigar smoking.
- The 5-15% of cigar smokers who inhale the smoke into their
lungs, have a risk 90% of that of cigarette smokers.
- The cigarette smoke
relative risk is lower than in more recent studies, possibly
due to less second hand smoke exposure of never smokers in
recent years.
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Cigar smoking risks: Cigars, health effects and
trends. Monograph 9, National Cancer Institute USA, 1998, based on follow-up of 1 million US subjects for 12 years,
including 22,000 cigar smokers, in Cancer Prevention Study I,
1959-72
Clearly, as Figure 3 shows, the risk of the average
cigar smoker is one-sixth or less than that of cigarette smokers.
FACT:. CURRENTLY A FLAT RATE OF TAX APPLIES PER GRAM
OF TOBACCO CONTENT
Figure 4. The
extra percentage risks of smokers or snuffers dying early (based on
no extra risk for never smokers.)
1. Cigarette
smoking risks: Bjartveit K, Tverdal A. Health consequences
of smoking 1-4 cigarettes per day. Tobacco Control 2005; 14:
315-20, based on followup of 43,000
Norwegians from 1970s to 2002. Assumes 20-2 cigarettes per day.
This shows that the risk of smoking 20-24 cigarettes a day was 3.4
times the risk of never smoking, or as we show it here, and excess
risk of 240%.
2. Cigar
smoking risks due to inhaling: Cigars, health effects and
trends. Monograph 9, National Cancer Institute USA,
1998, based on follow-up of 1 million US subjects for 12 years, including 22,000 cigar smokers, in
Cancer Prevention Study I, 1959-72. This publication provided cigar
risks as a fraction of cigarette smoking risks, which was then
applied to ref. 1) above. Inhaling cigar smoke resulted in 90% of
the mortality risk of cigarette smoking.
3 Cigar
smokers in general in ref. 2. had 15%
of the risk of cigarette smokers in Ref 1, giving an excess risk
from cigars of 37% above that of never smokers.
4 Cigar
smoking without inhaling was 6% the risk of smoking cigarettes,
or 15% extra risk over that of never smokers (whose baseline risk
is 100%).
5. Risks
of snus The risks of using snus are 10% of the risks of
cigarette smoking according to Levy DT et al. Cancer Epidemiology, Biomarkers
and Prevention 2004; 13: 2035-42, after these data were applied to New Zealand mortality statistics. This equates to a 12% extra risk over
and above the risks for never smokers.
Table 1. Risk to regular tobacco
users per gram of dry tobacco consumed daily
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% moisture
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Excess risk of daily lifetime use
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Daily dose moist g
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Daily dose dry g
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Excess risk per gram dry tobacco
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Tax per gram of
moist product if cigarette tax rate unchanged
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A
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b
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c
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d=(100-a)*c/100
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e=b/d
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35*e/20.7
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Cigarette tobacco
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19
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240
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6.6
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5.3
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45.3
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76
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Cigarettes
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13.5
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240
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13.4*
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11.6
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20.7
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35
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Pipe tobacco
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19
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37
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16
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12.96
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2.9
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5
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Cigars
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12
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37
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16
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14.08
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2.7
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5
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Moist oral snuff
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50
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12
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10
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5
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2.4
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4
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Nasal snuff
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33
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12
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10
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6.7
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1.8
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3
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Dry oral snuff
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25
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12
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10
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7.5
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1.6
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3
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Source:
Figure 3. For moisture content:http://www.ndp.govt.nz/tobacco/tobaccoreturns/2004/analysis/analysis-2004-tablesa-e.pdf
*
based on 18.3 cigarettes daily, of 0.73g tobacco each. Fraser T, McRobbie H et al. Evaluation of Smokestop an
internet based smoking cessation programme. Auckland, 2006. www.smokeless.org.nz/ryotax.htm
Figure
5. The January 2006 excise rate for tobacco products,
and revised rates assuming that cigarette tax rate stayed at 35
cents a gram, and other product rates were adjusted in line with
mortality risk, and moisture content.
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- The
current rate of tobacco excise is 35 cents per moist gram of
tobacco, regardless of risk. This leads to illogically high
tax rates for non-cigarette products.
- The
second column in each pair adjusts for both moisture and
risk of the product.
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Source:
Figure 3 and Table 1.
- Cigar smokers For all cigar
smokers combined, whether inhalers or not, cigar excise rates
should be only 15% that of the cigarette excise rate, instead
of 100% as at present.
- Allowing
for the fact that 10% of cigar smokers inhale moderately or
deeply, the overall risk for cigar smokers who inhale more
than slightly is equal to smoking about 10 cigarettes a day.
Therefore there is a case for levying a cigar rate that is
close to that on cigarettes.
- Pipe tobacco risks and
excise rate is assumed to equal the cigar rate, as the smoke
is harsh and alkaline in both cases.
- The risk of
snuff is assumed to be 5% of that of smoking 20
cigarettes a day.(Figure 1), and the
tax 7% of the cigarette rate, after allowing for moisture.
- Revenue. As the
non-cigarette products constitute only 1% of all tobacco use,
any loss of revenue can be easily made up by a small increase
of the cigarette excise rate.
Figure
6. A. The January 2006 excise rate for tobacco products, 35 cents
per gram of tobacco.
B. Revised excise rates assuming that cigarette
tax rate stayed at 35 cents per gram and other product rates were
adjusted in line with each product’s relative mortality
risk, and if cigars inhaled.
C. Cigars as used,
inhaled or not, and in line with the moisture content of each
tobacco product.
Between 5%
and 15% of cigar smokers inhale.1 If the tax was based
on the supposition that new cigar smokers all inhaled, then the tax
on cigars should (from Fig 2 above), be equal to (2.4-1)/(3.4-1)
=58% of the current rate for cigarettes.
Cost to Government
- 99% of all
tobacco sold is as cigarettes, or RYO cigarette tobacco. This
form of tobacco use carries the highest risk to the smoker,
and the highest cost to society and to Vote Health.
- Under 1% is sold as cigar tobacco.
Snuff is permitted for nasal use but not for oral use.
- Less tax on
snuff would encourage smokers to switch to less harmful ways
of using tobacco. Revenue would be little affected, as 99% of
revenue is from cigarettes.
1. Five percent of those who had only
smoked cigars, and 15% of those who had previously smoked
cigarettes, inhaled cigar smoke moderately or deeply into the lung,
with a risk of 50-90% that of cigarette smoking. Cigars . Health effects and Trends. Monograph
9. US National Cancer Institute 1998, p.108, 113.
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