Monday, 21 May 2018

ASH's cash up for grabs

Action on Smoking and Health (ASH) has been scrounging from the unwitting British taxpayer from the moment it was created in 1971. This year - for the first time ever - the government has put its contract out to tender. This means that another organisation could step in and grab ASH's cash, which currently amounts to £140,000 a year.

It also means that we can see what ASH is supposed to be doing with its ill-gotten gains. Despite being a lobby group, it is not supposed to use the money for lobbying. Indeed, it is now strictly prohibited from using the money for lobbying or campaigning. Instead, it does things like 'help ensure that positive policy developments are encouraged' which is, of course, totally different.

Technically, ASH are given their money to support to 'support the Tobacco Control Plan for England'. For most of the last three years, there hasn't been a Tobacco Control Plan, so one wonders what they spent it on, but a new plan was finally published in July 2017, focusing on harm reduction.

The plan boasted that the smoking rate in England fell from 20.2 per cent to 15.5 per cent between 2011 and 2017 and set a target of 12 per cent by the end of 2022. The decline in smoking after 2011 was certainly sharp but it had precious little to do with ASH's neo-prohibitionist policies. Rather it was due to the rise of vaping which ASH only embraced belatedly and half-heartedly.

Moreover, the early indications suggest that the latest wave of ASH-endorsed policies, including plain packaging, banning packs of ten and the EU's anti-vaping laws, have led to the smoking rate rising again

It seems to me that the government should be funding groups that whole-heartedly support policies which will encourage people to switch from smoking to vaping rather than those that support policies which consistently backfire.

The plan also noted the opportunities presented by Brexit...

...the government will review where the UK’s exit from the EU offers us opportunities to re-appraise current regulation to ensure this continues to protect the nation’s health. We will look to identify where we can sensibly deregulate without harming public health or where EU regulations limit our ability to deal with tobacco.

The opportunities are obvious. Repeal the Tobacco Products Directive, get rid of the stupid restrictions on e-cigarettes and legalise snus. To my knowledge, ASH have not called for any of this. A few years ago I heard Deborah Arnott, ASH's CEO, say that she supported legalising snus but that it was pointless campaigning for it because the EU would never change its mind. After Brexit, the EU's stance will soon be irrelevant and yet she has said nothing about snus. If she is not prepared to deal with the lowest of the low-hanging fruit, her organisation should not be eligible for the grant.

The grant is worth a total of £420,000 over three years. By the time it runs out in 2021, ASH will have been subsidised by the government for half a century. Perhaps it's time to give somebody else a go.

It's pretty obvious that ASH are the Department of Health's preferred supplier. The public health minister has a picture of Deborah Arnott in his Twitter profile and there are all sorts of hoops to jump through for anyone who wants to win the contract. Nevertheless, it would be nice to see ASH face a bit of competition for the first time in their lives. The deadline for applications is 15 June.

Friday, 18 May 2018

Open season on gambling

I ended my piece for Spiked yesterday by saying:

Is this the slippery slope I see before me? .. Yesterday, FOBTs were a uniquely evil gambling product that allowed people to spend £100 in 20 seconds. Today, it has been noticed that you can bet 10 times that amount in half the time on your mobile phone. At 7am this morning, the government had bravely decided to rid Britain of the greatest cause of problem gambling the country had ever seen. By 10am, expectations were being managed and we were hearing the same slogans that always follow nanny-state announcements. They are the same slogans we heard two weeks ago when minimum pricing was introduced in Scotland and the same slogans we heard a month earlier when the sugar tax began: ‘No silver bullet… You’ve got to start somewhere… This is a good first step…’. And so it begins.

Sure enough, today's Guardian editorial is drooling over the prospect of clamping down on gamblers and the gambling industry...

Britain should follow Australia’s lead in banning gambling adverts around live sporting events, but even that is not enough while firms can plaster their names across football shirts and grounds.

.. It is possible that Thursday’s decision on FOBTs could prod the sector into curbing its excesses, recognising that a failure to regulate itself will bring fresh pressure and, ultimately, further action by the government. It seems more likely that – as for its customers – the lure of a big payout may overcome rational judgment. The government is right to make it clear that “responsible gambling” is a matter for the industry, not just individuals. If the firms will not shape up, they must be forced to do so.

Meanwhile, the Times is celebrating a 'victory for morality over money' and eyeing up the internet...

Regulation is not always seen as unwelcome meddling and this should be a lesson for a government often too timid to intervene in the market when the social good or competition requires it.

Yet there is a fundamental flaw in looking at betting machine stakes in isolation: almost every person now has the potential for a FOBT in their pocket with the proliferation of smartphone casino apps. Many of these allow significantly more than £100 a spin. Whether ministers have the will to take on this fight as well remains to be seen.

Tracey Crouch, the minister who fought hardest to rid Britain of FOBTs, has signalled that she is keen to make yesterday's announcement the start of a wider battle against gambling, starting with the lottery...

UNDER 18s will be banned from playing National Lottery games under a radical gambling shake-up unveiled by ministers yesterday.

The Culture Minister Tracey Crouch said she will “gather evidence” on the effect they have on younger teens currently allowed to play.

.. It has been criticised in the past for “luring” kids into gambling with scratchcards based on games such as Monopoly.

It looks open season on gambling. It seems to me that the bookies' rivals in the gambling sector have made a mistake by backing the anti-FOBT campaign. The campaign has created the illusion of a problem gambling epidemic despite rates of problem gambling being essentially static for twenty years. There is no reason to think that the rate of problem gambling will decline in the next few years and when it doesn't, the government will look for other targets.

There are plenty of them. If FOBTs are fair game, so are lots of other gambling activities. Anti-FOBT campaigners claim that problem gambling is more prevalent among gamblers who play the machines than those who engage in any other form of gambling but, like much of what they say, this is not true. To quote the most recent evidence from NatCen:

The highest rates of problem gambling were among those who had participated in spread betting (20.1%), betting via a betting exchange (16.2%), playing poker in pubs or clubs (15.9%), betting offline on events other than sports or horse or dog racing (15.5%) and playing machines in bookmakers (11.5%).

These statistics don't tell you anything about what 'causes' problem gambling. Problem gamblers tend to play lots of different games and the more niche the game, the more likely you are to find problem gamblers playing it. And, for all their notoriety, FOBTs are fairly niche. Fewer than five per cent of the population play them in any given year.

Nevertheless, if the government thinks that it can address problem gambling by stamping out the activities in which problem gamblers are over-represented, it's got four targets to aim for. And if it wants to tackle people who are 'at risk of problem gambling' - a fictitious new category that has been invented to inflate the scale of the problem - online gambling is at the top of the list.

This suits Derek Webb, the founder of the Campaign for Fairer Gambling, who last year promised to go after online once he'd finished with the bookies. British casinos, arcades and pubs have little to fear from a campaign against internet gaming and may feel that they are already so tightly regulated that there is little more the government could throw at them.

That may be true in the short term. Online seems the obvious next target, but further advertising restrictions would affect the whole industry and the hoo-ha about FOBTs seems to have made the government wary of allowing higher stake limits on other gambling machines. A general climate of hysteria about gambling helps nobody except those who have a moral revulsion against gambling - of whom there seem to be many.

Thursday, 17 May 2018

FOBTs stopped

You may have noticed that the government announced that it is going to make regulate fixed-odds betting terminals into the dust today. I put out a comment on behalf of the IEA, saying...

“Today’s announcement shows that you can get anything banned in this country if you whine for long enough. Make no mistake, reducing the stake to £2 amounts to a ban. The machines will be taken out of bookmakers and players will move online where are no limits on stakes or prizes. Hundreds of bookmakers will close, thousands of jobs will be lost and the horse-racing industry will lose millions of pounds in subsidies. Taxpayers will then have to fork out £400 million to fill the gap in the treasury’s balance sheet.

“For what? To deal with a moral panic over something that accounts for just 14 per cent of Britain’s gambling expenditure. There has never been any evidence to support this campaign. The government is weak and cowardly to have given into it.”

And I've written a piece for Spiked about it so do have a read.

Bloomberg's war on shoppers

After a tax on sugar-sweetened beverages was introduced in Britain last month, campaigners wasted no time in calling for it to be extended to milkshakes, coffee and all food products that contain added sugar. The World Health Organisation recommends that sugary drinks be taxed at twenty per cent, claiming that this ‘can lead to a reduction in consumption of around 20%, thus preventing obesity and diabetes’ although there is no evidence that obesity rates have been affected by such taxes to date. WHO also recommends higher taxes on alcohol as one of its ‘best buys’ and supports ‘taxation of target foods’, by which it means food that is high in sugar, salt and fat. It claims that ‘food taxation’ has shown ‘promising results’ in countries such as Hungary.

WHO is working closely with the businessman Michael Bloomberg who has spent millions of dollars campaigning for soda taxes in several US states. Since being made a WHO Ambassador for Noncommunicable Diseases in 2016 - a title he briefly shared with Robert Mugabe  - the American billionaire has lobbied for taxes on food and drink to be adopted globally in an attempt to reduce obesity rates. He recently founded the Task Force on Fiscal Policy for Health to promote higher taxes on products that can be unhealthy if consumed in excess. Earlier this year, the Lancet journal devoted an entire issue to this campaign with an editorial by Larry Summers, co-chair of Bloomberg’s Task Force, who promised that his organisation would ‘engage the public, finance ministries, and others’ in making the case for higher taxes on a number of fast-moving consumer goods.

It is well established that excise taxes and sales taxes are financially regressive - they take a greater share of income from the poor than from the rich. In Britain, for example, people in the poorest decile spend 34 per cent of their disposable income on indirect taxes, including 2.9 per cent on tobacco duty and 2.0 per cent on alcohol duty. For those in the richest decile, the equivalent figures are just 14 per cent, 0.1 per cent and 0.9 per cent.

For Bloomberg, the regressive nature of sin taxes is a feature, not a bug. In a recent event at the International Monetary Fund, he said:

‘Some people say taxes are regressive but in this case - yes, they are. That’s the good thing about them. Because the problem is in people that don’t have a lot of money, so higher taxes should have a bigger impact on their behaviour and how they deal with themselves.'

But sin taxes are a reliable source of revenue precisely because they do not make people ‘deal with themselves’. For the most part, they simply raise the cost of living. Ostensibly, they are intended to reduce consumption of demerit goods and indirectly improve health, but they come with obvious costs. All of the products being targeted are price inelastic. Those who wish to achieve their optimal level of consumption (as judged by themselves) will be forced to pay significantly more.

Given WHO’s repeated recommendations for new and/or increased taxes on food, non-alcoholic beverages and alcohol, I have calculated the impact on the price of a typical basket of goods purchased by a typical household if WHO Bloomberg succeed in raising the price of ‘unhealthy’ food and drink by their preferred rate of twenty per cent. A breakdown of the figures is available in this briefing paper, but the annual totals are as follows:

United Kingdom: £458
United States: $612
Italy: €547
Ireland: €607

This is based on a typical household (two adults, two children) that chooses to buy the same basket of goods post-tax as it did pre-tax. In practice, the price effect would lead to lower consumption and therefore less expenditure on the targeted items. However, as the goods in question are generally price inelastic, a twenty per cent price rise would lead to sales falling by less than twenty per cent. Moreover, any reduction in spending on the targeted products would not necessarily be money ‘saved’ as consumers would usually buy other products as substitutes.

Nevertheless, it is clear that the kind of taxes on food and drink proposed by WHO and Michael Bloomberg would lead to a significant increase in the cost of living for consumers everywhere. Poorest households would be hit hardest and although my estimates focused on rich countries, the impact would be even more severe in developing countries.

Overall, the range of food and drink taxes proposed by WHO and Bloomberg could cost consumers in the United Kingdom £12.4 billion per annum in additional tax. In the United States, the cost could be $72 billion. In Ireland and Italy the cost could be €1 billion and €13.5 billion respectively. Even to a man of Bloomberg's means, those are big numbers.

Cross-posted from the IEA Blog.

Wednesday, 16 May 2018

Sin taxes are regressive and don't work - Mike Bloomberg

Mike Bloomberg is on a mission this year to tax us out of life's simple pleasures. He has his billionaire fingers in a lot of pies. In addition to his pressure group Vital Strategies, he has recently set up the Task Force on Fiscal Policy for Health with the likes of Nicola Sturgeon and Margaret Chan on the board and has founded something called STOP (Stop Tobacco Organizations and Products) with a further $20 million. His finger prints were all over last month's special edition of the Lancet which was devoted to sin taxes and he continues to spend a king's ransom lobbying for soda taxes in the USA and elsewhere.  

He also has his own media empire, of course, which comes in handy. This article by 'the editors' of Bloomberg News expresses views that are uncannily similar to those of its proprietor.

Governments everywhere should tax sugar tax to persuade people to cut back. (Bloomberg Philanthropies has supported efforts around the world to pass sugar-sweetened beverage taxes.)

Though it’s too early to be sure that the taxes will save lives, they’re likely to, because they clearly steer people — especially lower-income people — away from added sugar. Critics argue that soda taxes are regressive; in fact, they’re paid largely by wealthier consumers and they mainly benefit the poor, who are more price-sensitive and suffer disproportionately from obesity and diabetes.

The link under 'benefit' is in the original article and it goes to an editorial in the aforementioned Lancet issue which argues that sin taxes are not really, actually, honestly regressive written by Larry Summers of Bloomberg's Task Force on Fiscal Policy for Health. What a small world. And that is only one of several Bloomberg News articles that takes this line.

There will be more to come because Bloomberg's Task Force will soon be releasing a list of recommendations with the title 'Saving Lives, Spending Less'. A line from the above article gives us a clue as to what might be in it...

The evidence so far confirms that they [soda taxes] change behavior, which suggests they should be applied as well to added sugar in foods.

This flurry of activity is designed to feed into the World Health Organisation's strategy on 'non-communicable diseases' with a view to getting governments to sign up to sin taxes on booze, tobacco, soft drinks and food at the UN High Level Meeting on Non-Communicable Diseases in New York in September.

The 'public health' lobby's focus on non-communicable diseases gives them carte blanche to regulate our lifestyles without end, as I wrote in 2012 when the WHO got politicians to sign up to its ludicrous target:

If 194 countries really have signed this quasi-treaty, you can expect to hear much more about our ‘legal obligations’ to control eating, drinking, smoking and - the mind boggles - ‘physical activity’ for many years to come. You may recall last year’s charming article from Jonathan Waxman in The Times titled ‘To avoid cancer, let the State dictate your diet’, which was itself based on the claim that lifestyles cause 40 per cent of cancer. That is only the start and it is, of course, why the puritans, bureaucrats, nannies and headbangers of public health are so keen on the idea of ‘non-communicable diseases’, because it gives them what every trigger-happy army general wants: a war without end.

There is something uniquely odious about one of the world's richest men campaigning for regressive taxation. Last month he was interviewed by Christine Lagarde at an International Monetary Fund event and forgot to take the new party line about sin taxes not being regressive. 

"Some people say taxes are regressive, but in this case - yes, they are. That’s the good thing about them. Because the problem is in people that don’t have a lot of money, so higher taxes should have a bigger impact on their behaviour and how they deal with themselves.” 

It's so gobsmacking to hear a billionaire openly admit that his thinks that sin taxes are good because they are regressive that it's easy to miss the smug paternalism at the end of the sentence when he talks about how people on low incomes don't know 'how to deal with themselves'.

Later in the interview he talks about the joys of bullying smokers. He claims that tobacco taxes are the best way to stop children - who are not allowed to buy tobacco - from smoking, but when it comes to adults...

"If you want to get older people to stop smoking, taxes have relatively little impact. It is the fact that you can't smoke in most places, so we have laws in most cities in America - you can't smoke in the workplace and you can't smoke in the restaurant and you can't smoke in the theatre. And pretty soon, if I can't smoke anywhere, I stop smoking."

That looks like a frank admission that smoking bans are not really about 'protecting' people from the secondhand smoke, but are paternalistic devices to pressure adult consumers into quitting. Who'd have guessed?

He then says...

"But adults will stop feeding their family before they stop feeding their addiction. They will find the money to buy cigarettes at almost any price."   

This is an argument for higher tobacco taxes?!  Perhaps he's hoping that if smokers stop feeding their families, obesity rates will decline even if smoking rates don't.

In conclusion, sin taxes on price inelastic products are regressive and are not effective at getting consumers to change their behaviour. You probably already knew that, but it's good to hear it from the horse's mouth.

Tuesday, 15 May 2018

Australia: world leader in tobacco control

I wrote yesterday about the early indications that plain packaging has not only failed in Britain but has been counter-productive. Meanwhile in Australia, the home of plain packaging, the government is desperately trying to contain the booming black market in tobacco that its policies have created.

Last week it created a new Tobacco Taskforce to deal with an illicit trade that is officially estimated to supply 864 tonnes of Aussie smokers each year. 

In a single operation in Queensland, 31 tonnes was seized, which would have netted $29 million in duty. In Victoria, $48 million has been foregone on the tobacco seized, which weighed in at a nation-leading 53 tonnes. Seizures in NSW so far this year have accounted for 14 tonnes or $13 million in foregone revenue.

The previous financial year, the ATO seized 117 tonnes at an estimated total value in terms of duty of $90 million.

Estimates from the Department of Home Affairs and the ATO say this is merely a fraction of the total revenue foregone each year, which is as high as $600 million.

Everything going well in the world leader of tobacco control, then!

It's a large and growing problem and the government has had no choice but to pull its head out of sand because it is losing a fortune in tobacco duty. It has increased the maximum prison sentence for tobacco smuggling to ten years and has passed a law requiring people who import tobacco to have a licence. That should do it!

It has even banned cash payments of more than $10,000 dollars which, as Reason reports, will have an adverse impact on many legal traders.

There is, of course, an obvious and workable solution but no Aussie politician will mention it for fear of being accused of threatening Australia's imaginary smoke-free future...

Australia's black market for tobacco is easily and obviously tied to its massive tax rate. Cigarettes cost $30 a pack there! Yet the government claims that once it cracks down and gets all those missing billions in revenue, it'll be able to lower taxes. They just need to spend an additional $318 million first to create a brand new task force to go after the black market.

That won't work. The government needs to deal with the root cause of its black market: itself. The state has forced prices of tobacco so high that people are resorting to illicit means to get their hands on the stuff. Violating the privacy of all Australian citizens—demanding that they engage in financial transactions the way you want them to—will not do anything to fix this problem.

It has been five and a half years since plain packaging was introduced and four and half years since the government started ramping up taxes by 14 per cent per annum. The result has been exactly what anybody with any brains expected. Look at the red line below. That's the price of tobacco (via Sydney Morning Herald).

Only the most blinkered or dishonest anti-smoking zealot would deny that a problem exists. If you go to the laughable smear-wiki Tobacco Tactics, for example, you will find a page dedicated to claiming that the illicit trade has not risen since plain packs began in Australia. And it is worth remembering that the 'public health' spivs did not merely deny that the black market would grow in 2012, they denied it was growing for years afterwards. Here's a study by the prolific plain packs campaigner Melanie Wakefield from 2014, for example:

One year after implementation, this study found no evidence of the major unintended consequences concerning loss of smoker patrons from small retail outlets, flooding of the market by cheap Asian brands and use of illicit tobacco predicted by opponents of plain packaging in Australia.

And here's another of her studies from 2015:

While unable to quantify the total extent of use of illicit manufactured cigarettes, in this large national survey we found no evidence in Australia of increased use of two categories of manufactured cigarettes likely to be contraband, no increase in purchase from informal sellers and no increased use of unbranded illicit ‘chop-chop’ tobacco.

Haha! I was always against plain packaging but it was worth it coming into force just to see the cranks and liars exposed.

Monday, 14 May 2018

Plain packaging failing in the UK

It's time for the 'public health' lobby to wheel out the 'no silver bullet' excuses and hope that everybody's forgotten what a game changer plain packaging was supposed to be...

The Tobacco Manufacturers’ Association (TMA) today reveals data and exclusive new polling which shows how plain packaging is failing in the UK on the first anniversary after its controversial introduction.

The Smoking Toolkit Study has found that on a three month rolling average, from December 2017 to March 2018, smoking rates in England were higher than for the same time last year before plain packaging was fully introduced.

In case you are disinclined to believe the tobacco industry's trade association, you can see the source data here. It does indeed show smoking rates falling steadily until early 2017. Thereafter they stop falling and start rising.

This is not quite what we were led to expect, is it? By the end of the first quarter of 2017, plain packaging was ubiquitous if not quite universal. By May 20th, every pack sold had to be 'plain' by law. Moreover, May 20th 2017 was also the date that the EU Tobacco Products Directive came into full force.

We have therefore spent the last year with two supposedly crucial, evidence-based anti-smoking laws in place. The result? Higher smoking rates. Trebles all round!

It's still early days. We have yet to see what impact plain packaging has had on the illicit trade but, as the TMA note, counterfeit plain packs have been seized all over the country. The official figures on legal tobacco sales will be published before the end of the month, but provisional figures suggest that they have been pretty flat, with a rise in roll-you-own tobacco.

Given the rise in tobacco sales when plain packaging was first introduced in Australia, politicians need to start asking what is going on. Do smokers actually like the new packs or is it - as I warned several years ago - that the elimination of branding leads to consumers switching to cheaper cigarettes?

Whatever the reason, it's high time for 'public health' policies to be audited. The problem with plain packaging is not just that it doesn't work, nor that it has negative side effects. The problem is that it does the opposite of what anti-smoking campaigners claim to want. They spent years campaigning for this policy. They spent large amounts of taxpayers' money in the process. They cannot be allowed to move onto their next set of demands as if nothing has happened.

As with the sugar tax and minimum pricing, the people who forced this stupidity onto us should be forced to own the consequences.