Lemieux respectively argues that smokers who were affected by the warnings on cigarette packages have already quit, and those who have maintained the deadly habit value smoking more. He also believes an individual can be exposed to too much information on a particular topic and become desensitised to it, no longer creating a reaction. Speaking from personal experience, although smokers may overestimate the risks of smoking, I believe many hold the mentality, "it won't happen to me".
Although warnings on cigarette packages may not have a large effect on current smokers, prevention of new smokers, especially teens, is an alternate desirable outcome. Deterring new smokers from starting may not provide instant returns in decreasing health care costs but it will result in lower costs and less tobacco consumption in the future. In a survey done by the Canadian Council for Tobacco Control, increasing costs is among the top four reasons people quit smoking. This may be why Lemieux has been lead to believe large tax increases would produce the same results as in 1995. The problem with this concept is closely matched with that of cigarette package warnings. Those who can truly no longer afford smoking have already quit and the remaining tobacco users value their habit more. These smokers will turn to whatever means necessary to acquire the nicotine to feed their addictions.
Nicotine is among the most addictive substances used by humans and often requires repeated intervention and multiple attempts to quit. For this reason the demand for tobacco is very inelastic, meaning the quantity demanded is only slightly responsive to a price change. One way the government earns revenue in order to offset health care costs is through sin taxes. High taxes can be applied to cigarettes causing a small drop in demand and a large increase in price, resulting in larger tax revenues. Contradictory to the benefits of the higher price of tobacco, there are also implications that deter the government from placing high sin taxes on such a highly inelastic good. Because nicotine is so addictive users will turn to criminal activity to acquire this substance, as shown in 1993 when 30 percent of cigarette consumption was smuggled.
The point of diminishing returns for the government in their efforts to reduce tobacco consumption and health care costs is reached when the rate of smokers who are quitting hits a peak and begins to slow down. It is hard to determine when exactly this happened, being that our quit smoking campaign in Canada is over a decade old. Seventeen percent of Canadians are still smoking, a number which is slightly higher then all the years leading up to this one since 2005. This leads me to believe diminishing returns began not long after government efforts to reduce consumption began.
In most provinces in Canada, smoking cessation medications are classified as "lifestyle drugs" and are excluded from most of the country's public health care plans. Money should be reallocated to include these helpful quit smoking methods so they are available for every smoker who wants them. I have also noticed the new warning labels on packages have become much more graphic. My roommate, a ten year smoker, has gone as far as to ask the store clerk for a new package, saying she tries not to look as she pulls out a cigarette. Recent news has also announced a budget cut to government smoking intervention programs. Although anti-smoking advocates are upset with the change it may be just what is needed since the money being spent is no longer compensating health care costs. Hopefully, with the current change in efforts and involvement of new strategies we will begin to see results. After all, the diminishing returns are not only present for the government but also for us, the taxpayers.
References:
Lemieux, P. (2001, March 19). The Diminishing Returns to Tobacco Legislation. The Laissez Faire City Times. Retrieved May.31, 2012, from http://www.pierrelemieux.org/artdiminish.html
Image Retrieved May.31, 2012, from http://http://www.thestar.com/
Sayre, J.E., & Morris, A.J. (2009). Principles of Microeconomics (9th ed.). Toronto: ON: McGraw-Hill Ryerson.
http://www.cctc.ca/
http://www.cbc.ca/news/health/story/2012/04/17/pol-0tobacco-cuts.html
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/health73a-eng.htm
http://www.lung.ca/_resources/Making_quit_happen_report.pdf
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