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Fiscal cost of smoking far more than tax revenue from tobacco

MTI – Econews Wednesday 01:40, April 27th, 2011

The fiscal cost of smoking in Hungary is well over revenue from excise tax and VAT on tobacco sales, business daily Világgazdaság reported on Wednesday, a day after Parliament approved a ban on lighting up in most public places.

Budget costs related to smoking — both direct and indirect — came to HUF 379 billion-397 billion in 2004, Zsófia Pusztai, who heads the World Health Organisation office in Hungary, told the paper.

In the same year, budget revenue from excise tax and VAT on tobacco products reached just HUF 258 billion.

About 3 million of Hungary’s 10m population smoke. About 2,300 Hungarians die each year as a result of exposure to second-hand smoke, the paper said, citing scientific studies. Almost 28,000 Hungarian smokers die each year because of smoking-related illnesses.

The ban is likely to have little effect on Hungary’s catering industry, health economist József Bodrogi told the paper. In a recent study of 48 countries that introduced bans on smoking in public places, the only country in which turnover fell was Ireland, but there the ban came at the same time as a hike on the beer tax, he added.

Hungary’s tobacco industry, which employs almost 25,000 people, turns out more than 15 billion cigarettes a year, 11 billion fewer than ten years earlier.

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