Illegal Cigarettes and Other Bad Habits

I'm not a smoker, though my brother and I grew up with parents who smoked. We both remember bouncing around in the back of Buicks and Oldsmobiles -- with the windows rolled up -- while our folks puffed away to their heart's content. The smoke billowed around us like cumulus clouds, but we didn't care. Sometimes we'd ask Dad to blow smoke rings (such things were endlessly fascinating to pre-internet kids). When Mom bought a cigarette maker, I remember watching her crank 'em out by the dozen. I think I may even have helped a few times. This is what I remember anyhow, though my memory is a little clouded by a blue-gray haze.

In any case, I was not pro or anti smoking. Smoking was just a fact of life until that fateful day when Smoking Sam and Smoking Sue showed up at school. These were self-contained, motorized smoking machines that oozed black and brown tars into a test tube to graphically show how smoking poisons the lungs. I'm not sure if they still use these devices to scare the tar out of grade-school kids, but it worked like a charm on me.

Mostly worked, anyhow. I confess I smoked a few cigarettes in high school -- for love I suppose -- but after a week or so, the smokes didn;t agree with me and I'm certain I didn't agree with her. Although I used to put up with co-workers who smoked at work, my tolerance for second-hand smoke has dwindled over the years. Now I dread passing through the gauntlet of smokers that gather outside every entrance to every building where I work. Those of us who do not smoke grimly hold our noses and do our best to stay up wind, well away from the poison. It sounds self-righteous, but really it's just self-preservation.

The government has tried taxing the things out of existence, but to no avail. This is primarily because sin taxes create an artificial price differential between jurisdictions with different tax rates. It's always possible to buy low in one region and sell high in another. Worse, billions of counterfeit cigarettes are now manufactured in China and elsewhere and are smuggled into Europe and North America and sold at rock bottom prices. According to a recent Toronto Star expose, upwards of 25% of all cigarettes sold are illegal and bypass regulation and taxation.

Since the cost of health care for smokers is, on average, 25% greater than for non-smokers, and since smokers are more than willing to purchase illegal smokes, it may be time to use the health care system to discourage the habit and ensure smokers pay their far share of taxes. This could easily be done by charging an extra health premium to anyone who continues to smoke past an arbitrary cut-off date -- say one year after the smoking health surtax becomes law. If the surtax is set high enough, it may even be desirable to remove or reduce current cigarette taxes. Lowering the price would bring the cost of legal smokes in line with the street price of the illegal stuff and (hopefully) make life more difficult for counterfeiters and smugglers. In Canada, we already saw this in the mid 90's when the Federal and Ontario governments cut taxes on cigarettes to "compete" with illegal smokes.

Now, in the US, more and more employers are using financial penalties and rewards to discourage smoking. Some employer-sponsored health plans now require smokers to cough up an additional $20 to $50 a month for the privilege of lighting up. If such a policy were adopted by Canada's provincially-run health care systems, it would change the financial landscape of Canada's health care system. Turning a "sin" tax into a high-risk health tax will give millions of smokers a good reason to quit. At the same time, it will encourage die-hard smokers to choose to purchase legal cigarettes over illegal and counterfeit smokes.

With luck, within a few years, we'll all breath a little easier.

N.B. The use of the Monks "Bad Habits" album cover is used here by chance. A friend happened to play a few tunes from this album and the cover just seemed to fit the headline. I have no idea what the Monks think about smoking, but regardless, this was a pretty good album.