Deloitte presents winners and losers at a glance The Budget 2013

Now I’m not one to encourage smoking or the mass-uptake of the habit by society, but I couldn’t help but wonder what the true story is for the UK economy. I caught a sound-bite from an unknown politician a day or so ago saying something along the lines of “We must eradicate smoking from this country, or suffer the bankruptcy of the NHS.”

Bold words, and an excellent soundbite; it pushes the blame for the National Health Service’s problems onto someone other than the government.

But is the state of the NHS really the fault of the smokers?

Smoking Related NHS Expenditure

The NHS doesn’t keep statistics on what is and what is not ‘smoking related’, so there is a degree of artistic license in painting such figures.

In 2009 a Freedom of Information Act request  sent to the NHS estimated that £1.7 billion pounds a year is spent by the NHS on treating smoking-related conditions. The BBC in 2008 estimated it at £2.7 billion.

Revenue from Cigarette Taxes

There are two government revenue streams from cigarettes; Excise Duty and VAT. Approximately 89% of the retail price of a packet of cigarettes goes to the treasury, rather than the manufacturer or retailer. In 2010/11 (bearing in mind cigarettes have gone up twice since then in the 2011 and 2012 budgets – but that is the latest statistic available at present) the treasury profited by £11.1 billion pounds.

We could also say there is a third revenue stream when retailers sell to underage purchasers, and get caught out by police or local authority trading standards agents, with fines applied both on-the-spot of £80 a pop, and larger court-imposed fines when taken further or for repeat offenders. This would be difficult to quantify, however and has been ignored for the purposes of this article.

So, even if we revise the NHS smoking-related costs upward a couple of hundred million to £3 billion, that’s still a net profit of £8.1 billion to the treasury overall.

Benefits Beyond Taxation

I’m going to be a little tongue-in-cheek here, but it is food for thought all the same. Smoker’s on the whole live shorter lives than non-smokers. An unpublished study by a large (>5,000 employer) government organisation (you’ll have to take my word for this one) found that smokers take less sick days than non-smokers (which is why it wasn’t published!), work longer hours overall and are more amenable and adaptable to short-notice changes.

So smokers despite their occasional breaks from the workplace are more focused. They work longer hours thereby effectively negating those additional breaks, are more adaptable and won’t be a drain on their pension for 40 years.

Sounds like a winner all round to me?

So why is the government push push push when it comes to making people quit?

One of the horrors of modern living is the amount of food wasted on a daily basis, even in a small home.

Grandparents of people my age will extol how a loaf of bread and an egg could feed a family of five for a week during the rationing of World War Two  (minor exaggeration but you get my point) and yet we throw away 10 times as much food a week in 2012 and don’t think anything of it.

UK Food Waste Statistics

Before we delve into the topic at hand, let me scare you with some statistics:

UK households waste 6.7 million tons of food a year

That’s shockingly horrific. That’s almost a third of the total 21.7 million tons of food purchased each year.  (Better than the US mind you, who waste half of what they buy). While some is recycled into compost or animal feed, the vast majority (~85%) is sent straight to landfill where it decomposes, contributing to greenhouse gases and possible climate change.

61% of that waste is avoidable (4.1 million tons)

There are obvious factors in the total wastage a year that is unavoidable – there are only so many alternative uses for meat carcases, vegetable scraps and so forth. But 4.1 million tons of the waste is actual food that could have been eaten if only its storage or purchase had been managed better.

8% of food waste is still in date when thrown away

Even if managed properly, and despite all other points, 8% of food waste is perfectly good, edible food that is still in date. People simply buy too much for a particular meal, or do not want to eat what they have bought so simply throw it away rather than make use of it.

£10.2 billion pounds a year wasted

That’s the total figure of the amount of food that the UK wastes every year. That’s £420 per household, per year. That could pay your car insurance, or a weekend break for 2, or even kick-start your main summer vacation holiday fund. The US wastes $43 billion a year, or $590 per household.

Could any of this be reduced if we taxed wasted food?

Korea thinks so …

Korea is launching a food waste tax this year. This will be relatively easy for Korea to implement because the population already sorts food waste from normal domestic rubbish. The receptacles are being updated to contain RFID scanners, and special bags will be distributed to households encoded with their details. The more food waste you throw, the more you get charged for doing so.

The Korean Government’s goal is to reduce food waste by 20% in 2013 which would:

• save $144 million in food waste processing costs;
• save consumers $4.4 billion of food costs that wouldn’t be purchased and wasted; and
• reduce greenhouse gas emissions the equivalent of removing over 243,000 cars from use each year.

Semantics is Taxing

I dislike the idea of taxing something to reduce consumption of whatever it is being taxed. In this case, it’s still a consumption but the consumption of landfill and local authority collection services to collect the wasted food. It suggests that if you have the money to pay the tax, then you should flaunt it.

A Tax

If you throw away 20kg of food a year and are charged £5 per kilo disposed of, that’s £100 a year additional taxes the government takes from your home. Multiply that across the country, and that’s a lot of additional taxes for sure. But it sells the premise wrong. It won’t compel to reduce waste; it will merely make the population feel taxed even more. It doesn’t adjust the mindset positively. As another negative connotation – taxes are unavoidable.

The other half of why I dislike calling it a tax so much is I already pay for refuse collection as part of my council tax. I should not be double-taxed for the same service.

Pay As You Throw

What if we call it “Pay As You Throw”, which is essentially what Korea are calling their system. It’s still a tax by another name, but it is starting to turn it around into something slightly more positive. It still doesn’t hit the nail on the head though in my mind; if you can afford to throw lots, then throw lots you shall. If you can’t afford to, then you won’t.

Fine Time

What if, we call it a Food Waste Fine. Taxes are unavoidable, but fines? Fines are what you get when you do something bad. If you don’t do something bad, you don’t get fined. This puts the control in the hands of the disposer.

You are right if you think all that is just semantics, because it is. The bottom line is you still pay to throw away food. But sometimes it isn’t so much the idea that matters, but how you sell it.

Bring it on

I’d welcome a food waste fine, because I already know I waste too much food. Besides the hole in my pocket when I buy the food unnecessarily however, it doesn’t directly affect me. I know it causes greenhouse gases when it decomposes (and when it gets made and transported because of me, too). I know I probably throw away enough each year to feed a starving family somewhere for 6 months. I know all this, but I still do it.

If I knew it was going to directly cost me twice though? I think that’d change my behaviour. Share your thoughts in the comments!