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Hidden costs of smoking

Conor DillonApril 17, 2015

The "cost" of smoking in Germany is nearly 1,000 euros per man, woman and child, according to a new report. But the tax pinch for non-smokers is far less than this number suggests.

Symbolbild Rauchverbot
Image: Fotolia© Eric Limon #40566978

According to the German Cancer Research Institute (DKFZ) and University of Hamburg, who released the research Friday (17.05.2015) the yearly opportunity costs in Germany are due to shorter lifespans (20 billion euros or $21.5 billion), long-term unemployment from illness (13 billion), a general incapacity to work (8 billion), short-term unemployment (7 billion), and reduced earning capacity (5 billion). Smoking leads to the deaths of 110,000 each year.

Of the "1,000" euros per person annually, "700" of these euros are not in fact lost - they are simply never there in the first place, since the work just never got done.

As for direct costs on citizens, the more accurate number is 300 euros per head in Germany. Smoking places a massive burden on the country's health care system: 23 billion for smoking-related medical care, and another one billion for the effects of second-hand smoke on others (plus 220 million on children). Assisted living fees and rehabilitation add another billion, while accidents (fires, mostly, but also that smoldering trash bin at your local Bahnhof) cost a quarter billion per year.

So how much of this is paid for in advance through existing cigarette taxes? Fourteen billion, according to Germany's Federal Statistics Office (Destatis). Or, sticking with the 300 per year per head sum, smokers already pay for 168 euros of this burden, leaving every man, woman and child in Germany with 132 euros in yearly costs. This sum would actually be lower (108) if it weren't for tax revenues lost through black-market sales and cigarettes purchased abroad, which accounted for one in nine cigarettes in Germany in 2013, according to a study by KPMG consulting company at the behest of American tobacco company Philip Morris International.

Smoking in a car
Hidden costs: Second-hand smoke, damaged interior, potential fire, potential accidentImage: picture-alliance/dpa/dpaweb/M. Führer

More than one in four smoke in Germany, with a pack averaging five to six euros; of a five-euro pack, 3.75 euros constitutes tax revenues. By comparison, cigarettes average 7.80 euros per pack in the UK and 11.80 in Norway, according to the study.

As part of his research, Dr. Tobias Effertz at the University of Hamburg calculated what cigarettes in Germany "should" cost:

"The fair price for a pack of 19 cigarettes that would compensate for the direct costs is at roughly 7.80," he said.

The number would be 11.30 euros if cigarette sales were to account for the indirect costs of smoking, as well.