Phasing Out Tobacco

A United States Senator has an interesting idea.

U.S. Senator Mike Enzi, R-Wyo., has proposed a tobacco-control plan that cuts to the chase and simply orders companies to get fewer people to smoke. With roots in the regulation of power plant emissions and the educational reform act known as No Child Left Behind, Enzi's idea is that government would set performance goals for tobacco companies to meet. Instead of conventional "command and control" regulation -- in which government regulators tell people what to do -- under "outcome-based regulation," government tells them what to achieve.

How would tobacco firms comply? They could raise prices, promote cessation aids, sell nontobacco competitive products or innovate in ways we can't imagine. What to do and how to do it is their decision to make.

Under the senator's plan, tobacco companies would be required to reduce their U.S. customer base by approximately 90 percent over two decades. At the end of that period, our country could be down to an incredibly low smoking rate of about 2 percent, an ambitious target. Companies that failed to meet performance goals would face whopping financial penalties, making it fiscally more attractive for them to lose smokers than to gain new ones.

So is this feasible and how would it be done.

The tobacco industry is very much like the oil and gas industry - it is a dying industry with an addicted customer base that will pay almost anything for the product. In both cases, one for environmental and the other for health reasons, they know they have to phase themselves out. The oil and gas industry also knows it has a limited supply of resources. Virtually every oil and gas company has established an alternative and renewable energy component to eventually replace it’s fossil fuel production, in large part from the revenues from higher gasoline prices that they know their automobile dependant customer base will pay no matter what..

The tobacco industry should do what the oil and gas industry has done - not react to it’s decline but be “pro-active” and plan for it.

The tobacco industry could use additional profits from higher prices that it knows it’s addicted customers will pay to move into moral alternatives to tobacco production and sales. Higher prices will deter new customers which will help it achieve its mandated goal, not to mention the fact that enticing people to become addicted to tobacco is about as immoral as you can get.

Governments should immediately remove tobacco taxation from the general revenue stream (Consolidated Revenue Fund) so as not to be dependent on a tax base that it is attempting to phase out. The funds could be dedicated to a fund to pay for tobacco related health costs that will eventually decline over time. Some of it could also go into incentive payments to tobacco companies that lower their sales faster than the mandated targets.

This would all be in addition to government regulations prohibiting cigarette advertising, sales to minors and smoking in public.