Smoking and Drinking tax: How HMRC cashes in on our vices | Personal Finance | Finance

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HM Revenue & Customs generates billions of pounds a year from ‘sin’ taxes

HM Revenue & Customs generates billions of pounds a year from so-called “sin” taxes, charged on those little vices that help get us through the day.

We’re often told our unhealthy ways are placing a massive financial burden on the NHS and state finances, but new research suggests the wages of sin are helping to keep them going.

So stop feeling guilty about your bad habits, especially since guilt never stopped anyone indulging anyway.

SMOKING COSTS

Every year the NHS spends £3.6 billion treating smoking-related illnesses, while the Government spends a further £1 billion collecting cigarette butts and extinguishing house fires started by smokers.

However, this is dwarfed by the income the state generates from smokers according to the Institute of Economic Affairs (IEA).

It says smokers pay £9.5 billion a year in duty on tobacco products, then give the Treasury another financial kick because they die much earlier. This saves the state £9.8 billion in pension, healthcare and other benefit payments, even after accounting for the tax revenues lost when somebody dies.

Tobacco duty and early death savings total £19.3 billion. After deducting that £4.6 billion Government spending, the state makes a cool £14.7 billion annual profit.

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The Government spends just under £4 billion a year on alcohol-related problems

DEMON DRINK

Campaigners warn of the burden boozing and obesity place on public services, but the IEA claims this has also been greatly exaggerated.

It has found that the Government spends just under £4 billion a year on alcohol-related problems, such as healthcare, policing, criminal justice and welfare payments for people who are unfit to work, but taxes on alcohol top £10 billion.

Christopher Snowdon, head of lifestyle economics at the IEA, says it is time to stop pretending drinkers are a tax burden: “Teetotallers are being subsidised by drinkers by at least £6.5…

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