When it comes to levying tax on items that are unhealthy, governments need to walk a fine line. Any government has a duty to protect citizens and residents but they shouldn’t overextend their reach into the private decisions of society. The United Kingdom and Saudi Arabia have taken two steps this week that strike a good balance in this regard.
Saudi Arabia has imposed a new import tax on cigarettes. This move will raise money for the Saudi treasury while eroding the appeal of smoking. The tax is designed to dissuade smokers from continuing their dangerous habit and increases the price of a pack of cigarettes by 20 per cent to the equivalent of Dh12. If the tax succeeds in reducing the number of people who smoke, it will also ease the burden on the health care sector and be an overall benefit to society. It is difficult to argue with this logic.
In the newly announced UK budget for 2016, a tax will be levied on sugar-sweetened drinks companies. In advocating for the sugar tax, Chancellor George Osborne said that the UK had to “act now so we don’t have to pay later”. It is well-documented that soft drinks containing large amounts of sugar contribute disproportionately to the problem of obesity worldwide. As with the cigarette tax in Saudi Arabia, soft drinks are not being banned outright. Rather, they are being taxed to discourage their use and raise revenue.
Similar steps could be reviewed closer to home. The problem of obesity and related-diseases such as type-2 diabetes present a large burden on our health care system. Taxing smokers by raising the cost of cigarettes would also help raise revenue and reduce the number of smokers.
Ultimately, one of the roles of government is to protect its citizens. By increasing the overall health and well-being of society, any government will be helping to achieve a greater degree of happiness. During these tougher economic times, raising extra revenue while increasing the overall happiness of the population is a win-win scenario.