Russian Finance Minister, Alexei Krudin, Urges More Smoking, Drinking to Boost Government Revenues

The Russian Federation, like many other countries, including the United States, has problems raising revenues to fund government programs. But Russian Finance Minister Alexei Krudin thinks he has a solution-more smoking and drinking.

Russians, according to CBS News, hardly need encouragement to smoke or drink. Unlike in the United States, where anti smoking campaigns have reduced the number of smokers considerably, roughly sixty five percent of Russians smoke cigarettes. Russian drinking habits are legendary, according to CBS News roughly eighteen liters of liquor, mostly vodka, a year.

Krudin's reasoning is that, since both cigarettes and vodka are taxed, the more smoking and drinking that occurs, the more the Russian government takes in revenues.

On the other hand, the effects of smoking and excessive drinking on health, and hence health care costs, are also well understood. Smoking causes a variety of ailments that result in premature death, such as lung cancer and emphysema. A half a million Russians a year die from the effects of alcohol abuse. The life expectancy for Russian men is roughly sixty two years, as opposed to close to seventy eight years for American men.

Sin taxes, those imposed on commodities like cigarettes and liquor, usually have two fold purposes. The first, obviously, is to raise revenues. Such taxes are easy to sell because paying them is a matter of choice. Non smokers and teetotalers do not pay taxes on cigarettes and alcohol. The other purpose, though, is to discourage smoking and excessive drinking. The theory is that illness and death from these practices are diminished, thus cutting the cost of health care.

Some public officials contemplate adding items to the list of things subject to a sin tax, such as sugary snacks and drinks and fast food. Such measures are resisted by people who worry about the encroachment of the nanny state. The idea of increasing the tendency of the government to use the tax code to force people to behave in a certain way seem to many people to be an overstepping of the bounds of what government should do. On the other hand, people really should not smoke, drink in moderation, and avoid unhealthy food. But should the government force people to behave more healthily?

The problem with the Russian system is that cigarette and alcohol taxes are still relatively small compared to the United States. Kudrin is planning to roughly double cigarette taxes. Currently a pack of cigarettes cost about a dollar and a half in Russia, about an eighth to a tenth the amount for a pack in the United States, depending on one's state and locality. But Kudrin's request for more smoking and drinking will also raise health care costs in Russia, perhaps defeating the purpose of raising the tax.

Perhaps Russia, a country not shy about telling its people what to do directly, should greatly boost taxes on things that kill Russians, such as cigarettes and vodka. This will be resisted too, no doubt. Life in Russia can be bleak enough with the balm of a good smoke and a bottle of vodka.

Sources: Russians Urged to Smoke, Drink: Are They Crazy?, Neil Katz, CBS News, September 3rd, 2010

Russian life expectancy begins recovery, Russia Beyond the Headlines, March 24th, 2010

Life Expectancy, American, Centers for Disease Control