Review of Western Australian State Taxes 1994 - Chapter Two - Tobacco Taxation
AbstractThe purpose of this Chapter is to discuss the regulation of tobacco smoking by the earmarking of tobacco taxes for the purpose of health promotion. (However, the authors do recognise that the primary purpose of tobacco taxation is to raise revenue for the government). The Chapter focuses on the use of taxation to regulate -- or, more specifically, to reduce -- the level of tobacco consumption. The authors explore the legislative scheme under which tobacco taxes are levied in Western Australia, including the establishment of the West Australian Health Promotion Foundation (Healthway), which is funded by tobacco "licence fees" and organises health promotion activities. The Chapter argues that the criteria of efficiency and simplicity are inappropriate to evaluate a "regulatory" tax such as tobacco tax but does discuss the equity of tobacco taxation. The final section of the Chapter debates the issue of whether earmarking of tobacco taxes for regulation will have the desired effect of reducing tobacco consumption. This includes a discussion of the success of Healthway's activities. The Chapter concludes that the issue is primarily one of public policy rather than economics but suggests that it is too early to judge whether or not Healthway is the best means of addressing the public policy concerns related to levels of tobacco consumption. |