Smoking helps Czech budget, Philip Morris-funded study reveals

26-06-2001

According to the study, commissioned by a major American tobacco company and released in Prague last week, the negative economic effects of smoking in the Czech Republic are generously outweighed by financial benefits to government coffers. The study said smoking-related taxes pump more than 20 billion CZK (or 500 million USD) into the public treasury annually. In addition, the report says, on a purely economic point of view, the early deaths of smokers reduce government expenses for pensions and old-age housing by more than one billion crowns a year. And that outweighs the country's estimated annual loss of 15 and a half billion crowns linked to smoking-related health-care, worker absenteeism, income taxes lost due to death, and the costs of smoking-sparked fires.

The study, based on 1999 data, the latest available, indicates that the effect of smoking on the public finance budget was positive, estimated at 5.8 billion CZK.

The study, commissioned by Philip Morris, did not seek to tackle the question of whether smoking was good or bad for society in general. The report acknowledged that cancer, heart and respiratory diseases as well as low birth-weights in infants can be attributed to smoking. The costs of caring for these problems is heavily borne by the government through socialized health care.

But the government's annual income from the excise tax on tobacco alone tops 15 billion crowns - 4 billion above the government's cost of smoking-related health care. Value-added taxes, customs duties and corporate income taxes provide even more treasury income.

While the state budget relies heavily on revenue from the sale of tobacco products, Czech lawmakers have been stepping up the fight against smoking. But experts consider the efforts insufficient and point out that comprehensive tobacco control is still missing.

Although the situation has been improving, experts claim, the Czech republic is still about 20 years behind the United States or Western Europe in general recognition of the serious threat to people's health presented by tobacco.

26-06-2001