english

Running head: TAXES ON ALCOHOL AND TOBACCO

SHOULD TAXES ON ALCOHOL AND TOBACCO BE INCREASED TO HELP PAY FOR RISING MEDICAL COSTS?

ENG 215

02/20/2017

Should Taxes On Alcohol and Tobacco Be Increased to Help Pay for Rising Medical Costs?

Introduction

Tobacco and alcohol have become some of the most abused drugs in the world. This has not gone unnoticed, and this has brought about different consequences as well as debates on what should be done in future to stop the widespread use of these drugs. Different government entities around the world have come up with various methods of trying to curb the use of these substances as well as come up with different policies such as sin taxes in a bid to inhibit the use of these drugs, but the industry keeps thriving. The consumption of alcohol and smoking of cigarettes or tobacco related drugs has become a major cause of premature deaths among fatal ailments such as cancer, but despite this, people have simply refused to acknowledge this fact.

Alcoholism keeps growing by the day and worse of, and it has negative implicating factors on not only the consumer of the substance but also other unsuspecting human lives. Take a case of America alone, so many people lose their lives every year in DUI cases where an alcoholic person or drunkard decided to go driving under the influence only to cause major casualties or even fatalities. Smoking of tobacco products such as tobacco has led to an increase in the number of premature deaths especially in youth due to the wide spread effects of lung cancer as one becomes a heavy smoker.

Over the years, different debates have come up on the issue of alcohol and tobacco use which has brought about the rise of several measures to try to discourage the use of these substances. Among these measures are; raising tax on these substances to inhibit others from consuming them while also the using the same proceeds to either better the education sector of a country or to better the healthcare system of a country. This debate has brought about different results from people with some supporting the increase in taxes saying it's a positive measure to curb the vice while others saying an increase in taxes only leads to people's purchase of said substances in black markets hence bringing a negative aspect to a country's economy. This paper, therefore, seeks to address if an increase in taxation of alcohol and tobacco will help in mitigating the rising medical costs in the healthcare industry.

The Problem

According to Parry, the consumption of alcohol has a broad societal effect than most individual alcohol consumers tend to realize. Alcohol consumption has several negative effects and among them is the fact that the burden of medical treatment is largely borne by third parties such as insurance companies and the government. He further states that according to research done, the revenue the government collects in alcohol tax revenue is justified in the annual medical burden of alcohol-related diseases. This means that the revenue collected by the government does not benefit other development as it cancels out catering to the cost of medical cover of alcohol-related illnesses.

Alcoholism and smoking further broaden the societal cost effect by leading to reduced workplace productivity. Heavy consumers of these substances tend to have lower concentration at work while always taking breaks to indulge in their vices as they cannot go without them and this leads to lower work productivity. This effect further trickles down to the fact that companies have to send unproductive people packing; therefore, companies with such gaps in their employees have to incur employment costs as they search for alternative candidates to fill the vacant positions left behind by such people whenever they leave. This poses a risk in the company's financials as well as the larger economy. More so, heavy partakers of these substances tend not to acquire human capital through education and training programs as they use whatever money they get towards buying alcohol or cigarettes, therefore, leading to a loss in societal capacity of manpower (Parry, 2009).

According to Parry, alcohol related accidents contribute to the over 40,000 number of highway accidents experienced in the U.S every year. This further broadens the social cost of alcoholism and increases the medical burden of the country. Venkatesh also elaborates his concern as he illustrates how smoking brings about environmental pollution as smoking leads to air and water pollution while cigarette butts pollute the land. Smoking also leads to societal degradation as it is considered a bad vice by most people and therefore when children see such acts they get misguided by such acts. It also leads to second-hand smoking which is non-smokers passively inhaling smoke as smokers exhale and this also can lead to lung complications for the affected parties (Venkatesh, 2013).

Tobacco and its related products bring about various types of illness such as heart disease, strokes, diabetes, and osteoporosis as well as various forms of cancer such as mouth and lung cancer. Pregnant women who smoke risk increasing their child's infant mortality from sudden infant death mortality as smoking is the leading cause of premature infant death which can be easily prevented (Venkatesh, 2013). This also leads to child deformities or the birth of children with various health issues such as heart disease or failure. In men, smoking may lead to health problems such as erectile dysfunction as well as drastically lower their immune system hence they become prone to sickness. These problems reflect that alcohol and tobacco use pose a great increase to individuals’ healthcare and therefore increasing their medical cover hence it is sufficient to say that increasing taxation on these items to pay for the rising medical costs is thoroughly justified.

Solutions to these problems and their advantages

Alcohol and tobacco address/control in its various forms drastically reduces the burden of disease incurred by these substances, therefore, being an important healthcare policy instrument. Various methods can be used to discourage the use of these items such as alcohol and tobacco taxation, restricting the sale of these items, putting restrictions on the alcohol and tobacco market, using education as a form of persuasion and coming up with measures to reduce their availability. According to Van den Berg et al., increments in tax on alcohol has shown a reduction in the rate of drunk driving deaths as well as liver cirrhosis deaths. This therefore drastically lowers the rising medical costs (Van den Berg et al., 2008).

Bader also shows his support of increasing taxation tobacco as he outlines that when taxation on tobacco is passed on to its consumers as higher cigarette prices, there is a decrease in smoking and therefore a reduction in the adverse health consequences of smoking. This further has a positive effect to non-smokers by reducing their effect to second-hand smoke hence reducing their risk of getting heart diseases or cancer (Bader, Boisclair & Ferrence, 2011).

Van den Berg et al. also observed that in most western countries, the retail price of alcohol was mainly influenced by the excise duty charged on the alcohol. This, in turn, would lead to a decrease in consumption as demand would decrease due to the high price imposed on the alcohol. It is therefore safe to acknowledge that and advantage of sin taxation (which is the imposing of high prices on items such as alcohol and tobacco in order to discourage their use) can be a good way to mitigate the rising medical costs because it covers these costs better by actually lowering the medical cost incurred in a given year or state.

Marr and Huang outline that tobacco taxes are a proven strategy that helps reduce smoking which leads to reduced smoking rates and increased health gains. They attributed this to the fact that the more expensive some of these substances are the more people will use their money constructively by shunning away from unnecessary expenditure to them. This would, therefore, lead to an extension of life to the ones who stop smoking by reducing the rate of coronary diseases, heart diseases and the various forms of cancer (Marr & Huang, 2014).

According to Venkatesh, discouraging the use of alcohol and tobacco also has positive impacts on the environment as this lowers the pollution rate and fosters relationships between smokers and non-smokers who in a contrary situation would not see eye to eye. An increase in productivity can also be attributed to the lack of smoking as this ensures that employees can fully concentrate on their work at their organizations without any distractions as opposed to a smoker who would need a break every so often to quench their desire to either smoke or take some alcohol. This, therefore, leads to increased levels of productivity to an organization and the greater economy of a country. Venkatesh also argues that consequently, discouraging the use of alcohol and tobacco leads prevents addiction and hence fosters safety as individuals will not be tempted to steal to satisfy their need for these items whenever they have no money.

Conclusion

According to the problems listed above in this paper and the outcome of the discouragement of the use of both alcohol and tobacco, we can clearly see that these two substances are clearly part of the reason why there is an increase in medical costs, therefore, to answer the question whether taxes should be increased on alcohol and tobacco in order to help pay for rising medical costs I will answer with a definite yes. It is only fair that one of the contributors to the rising medical costs be used as a way to help pay them as this not only helps in payment of these costs but it also helps in reducing the overall medical costs in that a discouragement of the use of these two substances automatically creates a lack of interest in them which leads to lesser casualties and fatalities leading to lower medical costs. Governments should, therefore, use an increment of sin tax in such particular items to realize lower medical costs overall and also so as to enhance the general outcome of the healthcare of individuals.

REFERENCES

Bader, P., Boisclair, D., & Ferrence, R. (2011). Effects of Tobacco Taxation and Pricing on Smoking Behavior in High Risk Populations: A Knowledge Synthesis. International Journal Of Environmental Research And Public Health, 8(12), 4118-4139. doi:10.3390/ijerph8114118

Marr, C. & Huang, C. (2014). Higher Tobacco Taxes Can Improve Health And Raise Revenue. Centre On Budget And Policy Priorities, 1-6.

Parry, I. (2009). Should Alcohol Taxes Be Raised?. Budget And Taxes, 1-4.

Van den Berg, M., Van Baal, P., Tariq, L., Schuit, A., de Wit, G., & Hoogenveen, R. (2008). The cost-effectiveness of increasing alcohol taxes: a modelling study. BMC Medicine, 6(1). doi:10.1186/1741-7015-6-36

Venkatesh, N. (2013). Impact of Smoking: Influence on the Society and Global Business. International Journal Of Business And Management Invention, 2(1), 46-53.