Economic effects for citizens and the government of a country-level tobacco endgame strategy: a modelling study.

BACKGROUND: Aotearoa-New Zealand (A/NZ) was the first country to pass a comprehensive commercial tobacco endgame strategy into law. Key components include the denicotinisation of smoked tobacco products and a major reduction in tobacco retail outlets. Understanding the potential long-term economic impacts of such measures is important for government planning.

DESIGN: A tobacco policy simulation model that evaluated the health impacts of the A/NZ Smokefree Action Plan was extended to evaluate the economic effects from both government and citizen perspectives. Estimates were presented in 2021 US$, discounted at 3% per annum.

RESULTS: The modelled endgame policy package generates considerable growth in income for the A/NZ population with a total cumulative gain of US$31 billion by 2050. From a government perspective, increased superannuation payments and reduced tobacco excise tax revenue result in a negative net financial position and a cumulative shortfall of US$11.5 billion by 2050. In a sensitivity analysis considering future labour force changes, the government's cumulative net position remained negative by 2050, but only by US$1.9 billion.

CONCLUSIONS: A policy such as the A/NZ Smokefree Action Plan is likely to produce substantial economic benefits for citizens, and modest impacts on government finances related to reduced tobacco tax and increases in aged pensions due to increased life expectancy. Such costs can be anticipated and planned for and might be largely offset by future increases in the size of the labour force and the proportion of people 65+ years old working in the formal economy.