There’s no financial benefit to the country by banning smoking. On the contrary, as New Zealand shows. In my country (UK) the annual tax revenue from tobacco duty is £10.0Bn. The VAT tax on that (20% charged on both the tobacco and the duty) brings it to a bit over £12Bn. The annual cost of the entire UK National Health Service is £181.7Bn, so taxes on tobacco fund 6.6% of the entire cost of healthcare, including fixed costs and overheads.I thought the original idea was to save money in the long run by avoiding health care costs covered under the government funded health care plans. Benefiting the health of the population was a secondary goal, but the primary goal was economic. Anyway, outright prohibition has not worked well in other cases.
The annual cost per patient of treating lung cancer in the UK is £9,000 (according to Cancer Research UK, although this is much higher than the £2,800 average cancer treatment cost, so perhaps they are exaggerating to make a point - but let’s assume it’s correct). Survival rates are about 30% (so the 35,000 annual deaths would indicate 50,000 total lung cancer patients - though not all are smoking related). If you assume 100% of lung cancer patients are smoking-related, then the total cost of their treatment is £450 million per year, against the total tobacco tax revenue of £12 billion per year (i.e. tobacco taxes are 27 times the cost of lung cancer treatment).
There are no other diseases that have a statistically significant link to smoking. But anyway the total UK cost of all cancer care is £5Bn per year, according to the UK government, which would still only require 40% of the tobacco tax revenue.
So that’s why governments need this revenue. Smokers subsidise everyone else’s healthcare to quite a large degree. At least that’s the UK equation, but cigarettes are about £15 for a pack of 20 here!