Are smokers a burden on the state? Tobacco opponents demand higher taxes

Die Tabak Zeitung // Ever higher tobacco taxes are being discussed in Brussels. It is clear that the industry does not want to accept this. “Die Welt” has now unearthed a ten-year-old study that is probably not well known to the German public.

In “The external costs of smoking in Germany”, Professor Berthold Wigger from the Karlsruhe Institute of Technology made some astonishing calculations back in 2015. While tobacco opponents tirelessly point out that medical costs, lost working hours and other expenses clearly outweigh the revenue from tobacco tax. For example, the German Cancer Research Center (DKFZ) writes in its “Tobacco Atlas 2025”: “The annual economic costs attributable to smoking far exceed the revenue from tobacco tax.” The Heidelberg researchers compared the revenue from tobacco tax (15.6 billion euros) with the costs they calculated (around 98 billion euros).

However, Wigger arrives at completely different amounts. He also takes pensions and annuities into account. The argument: smokers die earlier. In their shortened lifespan, they receive lower pensions, generally require less medical treatment and – as drastic as this may sound – reduce the burden on insurance companies and the state.

Put simply, Wigger estimates that smokers living in 2011 will have incurred costs of 157.6 billion euros by the end of their lives. These costs are offset by savings in retirement benefits of almost 194 billion euros. This alone produces a positive result for the public purse of 36.4 billion euros. Added to this are the cumulative tobacco tax revenues for the remaining lifetime of smokers, which Wigger calculates at a total of 375.7 billion euros. It is therefore no wonder that his conclusion is: “The available calculations have shown that the aggregated net external costs of smoking are negative.” The scientist goes on to say that an observation made by Adam Smith around 250 years ago should still apply to tobacco tax today: “Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.” (“Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which have become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.”)

However, this is not the end of the discussion. The Federal Association of the Tobacco Industry and Novel Products (BVTE) points out that “the price of a pack of 20 cigarettes will rise to around €12.50 by 2028 if the Commission proposal becomes the current EU directive”. In 2024, the state will have generated tax revenues of 19.8 billion euros from tobacco and nicotine. Tobacco opponents, on the other hand, emphasize that more and more life-prolonging and expensive treatments are available and approved. This in turn further increases costs. Significantly higher taxes are therefore justified.