Raising taxes on tobacco, alcohol and sugar would save millions of lives

A report[1] highlights the health and financial benefits of increasing excise taxes on tobacco, alcohol and sugary drinks. It concludes that raising the price of these unhealthy products can prevent millions of premature deaths and generate billions in revenue for governments around the world, particularly in low- and middle-income countries.

The report, published by the Task Force on Fiscal Policy for Health[2], highlights the urgency for governments around the world to implement such a fiscal policy, which remains underused while it contributes to improving public health.

Tobacco use kills 8 million people worldwide each year, and 10 million lives are lost each year to diseases related to tobacco, alcohol and sugary drinks. Together, these harmful products have an estimated economic cost of more than $4 trillion.

Tobacco tax policies have stagnated or regressed since 2020

Between 2000 and 2022, the global proportion of adults who use tobacco fell from 32.7 % to 20.9 %. However, this relative 30-year success masks an increase in the total number of smokers, due in part to the industry’s strategy of targeting markets in low- and middle-income countries at a time when these regions were experiencing significant population growth. As a result, the overall burden of tobacco-related disease has shifted from high-income to low- and middle-income countries. In addition, tobacco companies are aggressively marketing their products to youth, particularly in low- and middle-income countries where youth populations are large and growing. Between 1999 and 2018, smoking prevalence among youth (aged 13–15 years) remained the same or increased in 60 of the 135 countries for which data were available.

After years of modest progress, government action on tobacco excise taxes has stalled. In 2020, excise taxes on the top-selling brand averaged 41.4 % of the retail price in the 183 countries where cigarettes are taxed. In 2022, this figure was 42 %, virtually unchanged and well below the WHO recommendation of at least 70 % of the retail price. Comparing 2022 with 2016, cigarettes actually became more affordable in 41 countries. Prices remained unchanged in 115 countries and were less affordable in only 32 countries.

The report also illustrates the situation in the Philippines. The Philippine government has significantly increased tobacco excise taxes through four successive reform bills since 2012. As a result, tobacco prices have increased six-fold and smoking prevalence has declined among adults from 30,000 (2009) to 20,000 (2021), and among youth from 18,000 (2007) to 10,000 (2019). Tobacco excise revenue has increased from $1 billion in 2012 to $2.9 billion in 2022.

Alcohol is becoming more affordable around the world

Alcohol consumption is another major cause of premature death and disease: 2.6 million premature deaths in 2019, including more than 700,000 from injuries. Alcohol has a disproportionate impact on young people. The largest proportion (13,133) of alcohol-attributable deaths in 2019 were among people aged 20–39. Globally, alcohol consumption per adult (aged 15 years or older) increased from approximately 5.9 litres of pure alcohol in 1990 to 6.5 litres in 2017 and is projected to increase further to 7.6 litres by 2030.

Fewer governments apply excise duties on alcohol (149) than on tobacco (183), and the average share of excise duties in alcohol prices is only about 17 %, compared to 42 % for tobacco prices. As a result, the report says, alcohol has become more affordable in most countries for which data are available.

Mixed progress on taxes on sugary drinks

Sugary drinks contribute to the increasing trend in sugar consumption worldwide, which is associated with an increased prevalence of obesity, diabetes, and cardiovascular disease. The prevalence of obesity increased from approximately 9 % in women in 1990 to 19 % in 2022, and from 5 % to 14 % in men during the same period. Among schoolchildren, obesity increased from 2 % to 7 % in girls and from 2 % to 9 % in boys. In 2022, more than 1 billion people are obese worldwide. The economic cost of obesity-related diseases is expected to reach $4.3 trillion by 2035, or nearly 3 % of global GDP.

Unlike tobacco and alcohol taxes, many countries have made progress on excise taxes on sugary drinks. Since 2018, taxes on sugary drinks have been adopted in 41 additional countries and are now levied on these products in 132 countries. However, taxes on sugary drinks remain extremely low. Globally, the median share of excise taxes in the price of sugary drinks is only 3.4%. This is well below the 20% price levy required as a minimum to drive behavioural change towards these products.

Taxation, an effective tool that is largely underused

Excise taxes are relatively easy to increase in a short period of time. Excise taxes on tobacco, alcohol and, increasingly, sugary drinks are already levied in most countries and the tax administration systems to collect these taxes are already in place.

The authors of the study say that without a significant increase in health taxes, the burden of deaths and non-communicable diseases linked to the consumption of these harmful products will continue to weigh on populations. Low- and middle-income countries are in dire need of additional revenue, and health taxes are a relatively simple and effective way to collect them.

The growing burden of noncommunicable diseases has long placed a strain on health systems and resources around the world, a situation that has been greatly exacerbated by the COVID-19 pandemic. Many countries have yet to recover their capacity to care for people with noncommunicable diseases, much less their level of elective treatment or outpatient visits.

Thus, an increase in excise taxes on tobacco, alcohol, and sugary beverages sufficient to raise prices by 20% would generate $2.2 trillion over five years, of which about two-thirds ($1.3 trillion) would be raised in low- and middle-income countries. An increase in health taxes sufficient to raise prices by 50% would generate about $3.7 trillion in additional revenue over five years.

For tobacco alone, by raising prices by 20 %, tobacco taxes would contribute an additional $488 billion to government revenues over 5 years. They would reduce consumption by about 10 %. By raising tobacco prices by 50%, the taxes would generate an additional $1 trillion in revenues over 5 years and reduce tobacco consumption by almost 25%. More than 100 million people would quit smoking, including nearly 85 million in low-income countries.

Overall, by increasing taxes to raise real (deflated) prices by 50% over a 50-year period, reduced consumption would prevent 50 million premature deaths. Tobacco taxes would prevent more than half of these deaths (27.2 million), alcohol taxes 21.9 million, and taxes on sugary drinks 2.2 million.

The impact of commercial determinants of health on public health

Commercial determinants of health refer to the way in which commercial actors, their products and their practices influence health. Some of these industries: tobacco, alcohol, agri-food or even fossil fuels deploy numerous strategies to hinder the implementation of policies relating to non-communicable diseases (cancers, respiratory and cardiovascular diseases, diabetes, etc.) caused by their products.

The main obstacle to increasing health taxes is the opposition of these industries. When health taxes are proposed, industries first deny the risks induced by the consumption of their products, then they maintain doubt, divert the attention of decision-makers to other subjects; they spread disinformation or create front organizations that carry their message; finally, under the cover of corporate social responsibility (CSR), they prevent the adoption of tax policies that affect their interests. When health taxes go through the legislative or regulatory process, industries exert pressure on public authorities to influence the proposals in order to make them less effective and propose watered-down texts. Finally, when health taxes are enacted, the industry seeks to delay or cancel the policies by taking legal action.

Governments must protect themselves from attempts at interference by these industries. The authors of the report of the Task Force on Health Tax Policy call on governments to adopt legislation and policies to limit the influence of companies that manufacture and market products that are harmful to health, particularly to young people. For tobacco, Article 5.3 of the WHO Framework Convention on Tobacco Control aims to protect public health policies from the influence of the tobacco industry. The guidelines for implementing this general obligation of the treaty recommend, in particular, limiting interactions with this industry to what is strictly necessary and ensuring transparency of these relationships where they exist. Any non-binding partnership must be rejected. No special advantage must be granted to this industry, resulting for example in a ban on donations from this sector and its exclusion from all public finance and so-called responsible finance. Finally, measures must be taken to avoid conflicts of interest. This approach could be applied to the fight against all non-communicable diseases (NCDs) and associated industries.

©Generation Without Tobacco

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[1] Task Force on Fiscal Policy for Health (2024). Health Taxes to Save Lives: Health Taxes: A Compelling

 for the Crises of Today. Chairs: Michael R. Bloomberg, Lawrence H. Summers, and Mia Amor Mottley. New York: Bloomberg Philanthropies.

[2] Co-chaired by philanthropist Mike Bloomberg, Barbados Prime Minister Mia Amor Mottley and economist Larry Summers, the task force met in 2018 to focus on non-communicable diseases and includes experts in fiscal policy, development and health.