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‘Sin taxes’ to bring in £25bn next year

07 August 2017

With the forthcoming sugar levy expected to raise £500m a year, the UK government’s revenues from so-called ‘sin taxes’ are set to total £24.7bn by 2018.

Contrary to popular belief, the three most censured ‘lifestyle factors’ – alcohol, smoking and obesity – do not cost the taxpayer money, says the Institute of Economic Affairs. It says the punitive taxes levied on them more than cover the costs they impose on public finance.

The IEA’s report Smoking and the Public Purse revealed the government spends £3.6bn treating smoking-related diseases on the NHS and up to £1bn collecting cigarette butts and extinguishing smoking-related house fires. The government then saves £9.8bn annually in pension, healthcare and other benefit payments due to premature mortality. The duty paid on tobacco brings in £9.5bn.

This means, says the IEA, that smoking produces a net saving to government of £14.7bn a year, at current rates of consumption.

The gross cost to public services, including healthcare for drinking related diseases and expenditure on pubic order is estimated by the IAE at £4.6bn. The duty paid on alcohol brings in £10.7bn, meaning a net benefit of £6.1bn.

Only obesity incurs a net cost to the taxpayer of £2bn a year, once the sugar levy is included.

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