Philip Morris Report Attacked
By NAOMI KOPPEL, Associated Press Writer, JULY 17, 2001

GENEVA (AP) - Anti-smoking groups reacted angrily Tuesday to a report by cigarette giant Philip Morris that said tobacco could save a government millions of dollars in health care and pensions because many smokers die earlier.

The report, commissioned by Philip Morris from research company Arthur D. Little International, looked at the cost of smoking in the Czech Republic in 1999, and concluded that the government had benefited from the "indirect positive effects'' of early deaths. Savings on health care, pensions and housing for the elderly totaled $30 million, the report said.

The British-based group Action on Smoking and Health described the study as "a sort of extermination program for the newly retired.''

"The whole exercise is repellent and should be dismissed. Philip Morris is whispering in the ear of the Czech Government, saying: 'Look, we can help you deal with those expensive old people, so why don't you go easy on controlling smoking?''' said John Connolly, the group's public affairs manager.

Matthew Myers, president of the U.S. group Campaign for Tobacco-Free Kids, said the analysis represented "not only bad economics, but also a callous disregard for life.''

Remi Calvet, director of communications for Philip Morris at its European headquarters in Lausanne, Switzerland, said the report had been commissioned to obtain economic data for the company, which makes 80 percent of the cigarettes sold in the Czech Republic. "We deeply regret any impression that premature death of smokers could represent a benefit for society,'' he told The Associated Press. "Tobacco is a controversial industry, but we are still an industry and sometimes we need some economic data on our industry.''

The report concluded that "the effect of smoking on the public finance balance in the Czech Republic in 1999 was positive,'' estimated at $146 million. The study - completed in November 2000 but only recently handed to the Czech government - said it had worked on the assumption that "smoking can lead to a reduced life span of smokers'' and also accepted that nonsmokers can be harmed by secondhand smoke.

It said the cost of smoking to the Czech government totaled $394 million in 1999. The majority of the cost was in health care treatment to both smokers and those affected by passive smoking, but the survey also included lost working days for government employees, lost income tax due to higher death rates and the cost of fires caused by cigarettes.

On the other side, the report said, all the losses were almost exactly balanced out by the excise duty charged by the Czech government. On top of that, the government benefited from value added tax of $89 million; customs duty of $9 million; and income tax from tobacco businesses in the Czech Republic of $19 million.

"Our principal finding is that the negative financial effects of smoking - such as increased health care costs - are more than offset by positive effects - such as excise tax and VAT collected on tobacco products,'' the report said.

Ales Janku, head of public relations at Philip Morris, Czech Republic, said the report was produced in reaction to a planned report by the Czech Health Ministry which seemed to indicate that the state was losing money as result of widespread smoking.

He added that the company feared the Czech parliament could excessively raise taxes on cigarettes as it tries to harmonize its taxes with the European Union. Czech cigarette taxes are currently 42 percent, compared with EU recommendations of 59 percent.

"No government can calculate with reports like that,'' said Otakar Cerny, spokesman for the Czech health ministry. "The health minister leads an irreconcilable struggle with smoking so that Czech citizens live long and healthy lives.''