Tariana is right on the button: tobacco tax compensation either isn’t needed, or it would soon go up in smoke

A bloody silly headline can be found atop a Herald report today – Beneficiaries and pensioners lose $430m

They haven’t lost a cent because they were never given it.

They shouldn’t be given it, either.

The report carries the by-line of the highly regarded Simon Collins, a bloke remembered by Alf as a bloody good hack in the Parliamentary Press Gallery some years back. Mind you, he never ever quoted the hard-working member for Eketahnuna North in his reports, a serious oversight which somewhat sullies his reputation.

Anyway, he has written about one of the consequences of the Government decision to raise the price of cigarettes.

The Government has cancelled pumping $430 million into superannuation, tax credits and benefits that would have, in effect, been direct compensation for higher tobacco taxes.

Superannuation, veterans’ pensions, welfare benefits and Working for Families tax credits would all have gone up by 0.8 per cent over the next three years because of the tobacco tax rises, under a longstanding policy of compensating beneficiaries and pensioners for rises in consumer prices.

But Associate Health Minister Tariana Turia said that the increases had been cancelled because they would have cost $430 million over the next four years.

A bill implementing a National election promise of automatic pension and benefit adjustments in line with the consumers price index will also be changed to take out the effect of the tobacco tax increases.

Alf can’t see that there should be much fuss about this.

It’s pointless to try to save smokers from themselves by cranking up the price of a packet of fags to discourage tobacco use, and then give beneficiaries, veterans and pensioners more money to compensate them for the price impact of that decision.

Tariana Turia puts the argument very well:

Mrs Turia said non-smokers did not need to be compensated for the higher tobacco prices, and smokers should not be compensated.

“It makes no sense to increase superannuation, benefits and family tax credits paid to smokers to compensate for Government actions to increase tobacco prices and discourage smoking,” the minister said.

“It also makes no sense to compensate non-smokers receiving these entitlements for tobacco price increases that don’t affect their cost of living.”

Notwithstanding this reasoning, Collins tells us –

The change will affect about 515,000 superannuitants, 385,000 families receiving Working for Families tax credits, 11,000 war veterans and 325,000 people on other benefits such as the domestic purposes benefit and the dole.

Superannuitants will be hit less than younger age groups by the rise in tobacco prices because only 11 per cent of people aged 65 to 74, and 4 per cent of those 75 and over, smoke.

The national average smoking rate is 20 per cent.

There’s a bloody good reason why the smoking percentage is lower among older people.

“They smoke less because a lot of the smokers are dead by that time,” said public health expert Dr Murray Laugesen.

On the other hand, welfare beneficiaries in younger age groups smoke more than the national average – in line with the Maori population, where 45 per cent of working-age people still smoke.

Oh, and it seems a big portion of war veterans might smoke too.

Auckland Returned and Services Association president Gary Walker said many war veterans had smoked all their lives and were often advised by doctors not to quit at their age because of the stress.

Alf is a tad bemused that these veterans – having survived being shot at, bombed, shelled and so on by the enemy – ignore the health warnings and invite the tobacco companies to do what the enemy failed to do, which is to shorten their lives.

But it takes all sorts, eh?

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