What money can’t buy

by Lorenzo Piccoli

Smoking is big in the Czech Republic. A few years ago the Czech government considered raising the tax on cigarettes. Major cigarette corporation were very unhappy. To contrast the decision of the government, Philip Morris commissioned a study on the effects of raising the tax on the national budget. The study found that the government actually gains more money than it loses from smoking and a higher taxation would have had negative effects. How so? The cost-benefit analysis showed that of course smokers impose higher medical costs on the national budget; but only as long as they are alive. And smokers tend to die much earlier, thus saving the government a lot of money in pensions, health care, and housing for the elderly. Each smoking-related death saved the government $1,227.