If everyone in the UK gave up smoking today, how would the government compensate for the loss of tax revenue?

Question

I know that smoking related illness costs the NHS a lot of money, but that's in the future. I'm talking about the here and now.

Answer 1

Good question - worth a star - they can't want everyone to give up of course, any more than they want people to stop drinking alcohol or driving cars which consume fuel. They tax just about everything, and a serious number of people no longer paying those particular taxes would cause a major revenue loss. They'll soon be measuring our lung capacities and taxing us for the air that we breathe.

Answer 2

Big Ste took my answer :( But yes what people don't actually know is it costs the NHS billions on treating smoking related illnesses - more than the taxes earned on cigarettes. So in short the NHS side of income taxes could come down to compensate for an increase in what the government use elsewhere. Or perhaps allow larger investment in the NHS to improve services.

But that's a one-sided arguement. Because as you allude to in "Additional Details" smoking related illnesses would still exist until years after. Newsagents would see revenue drops due to lack of sales in cigarettes and the money the government earns from cigarette manufacturers would be lost. As would jobs in the factories and delivery trucks etc... It would be a blow to the economy and so perhaps my arguement above is flawed.

So what happens? I would have to guess that VAT would rise to something equivalent to what it is here in Ireland i.e. 21%, taxes on cars would increase and then perhaps look at increasing taxes on the next addictive item such as alcohol.

Answer 3

Steve B - excellent answer - it is of course true that the vast majority of smokers will NOT give up. Those that have given up as a result of the recent ban in public places are largely the social smokers whose consumption is relatively small. Smoking has been banned in most workplaces for ages now, and yes tax revenue will fall again somewhat due to the expansion of the ban into public places. The Government, while losing some revenue now will eventually recoup it via savings in the NHS, particularly from the savings involved in treating PASSIVE smokers (who have not actually 'contributed' to the revenue from tobacco anyway). The large majority of smokers will continue puffing away and pouring tax revenue into the coffers (probably at hiked tax rates due to the fact that the habit will become less and less socially acceptable). And bouncingtigger - there is no benefit to the revenue of the Government from 'increasing interest rates'! How could there be, when it is servicing the National Debt .... via interest payments..... Added to the fact that 'the Government' does not actually set the interest rates, that's gotta be the most ill-informed comment on this question....

Answer 4

This is a great question and one I would love to see the response from our Government.
Firstly smokers pay millions in taxes which the bulk go towards our health services and which the government would never obtain elsewhere.
There would be huge job losses creating many more unemployed which means more cash out of working peoples wages.
All those who do not smoke will soon be moaning when they have to pay a lot more for everyday living expenses because the cost of many things will have to be increased such as food,petrol,household items and,of course income tax will go up,vat will increase and the dreaded Council Tax will go through the roof.
Of course there will be lots of other ways that we will all suffer and then the no smoking brigade will regret their bullying attitudes.
I think if you smoke you are in a way contributing to the country's economy.

Answer 5

They've already planned that far ahead. They have raided £100 million from pension funds. They have introduced Inheritance tax. Home Information packs. Tripled the price of a passport. Doubled the price of fuel. Death Duty. Then ID cards are next. What other ways can they raise money from Middle England?.

Answer 6

What are you on about, they have already lost a shed load of tax on smoking through thousands giving up smoking and have already adjusted the tax system to make up for it but you have not noticed..

Answer 7

Dont be silly ... smoking is adictive and the majority will NEVER give up ..

Perhaps your question should be "how does the Government balance Tax revenues to meet its spending commitments ?"

and of course the generic answers involve increeasing tax elsewhere and/or reducing spending ...

Answer 8

They would hit the next easy target "The Motorist" it has already started with toll roads raising the road tax and increasing the tax on fuel, we already pay fuel duty but did you know we also pay vat on the fuel duty so we actually pay a tax on a tax.

Answer 9

they would make up for it by saving over a billion pounds every year on the NHS due to smoking related illness..... also it would free up more NHS staff to treat people who deserve it that have real illnesses and not related to self inflicted cancer sticks.

Answer 10

As usual they will find stealth tax on another menace (or money spinner) , the car, and in addition increase income tax, and maybe VAT.