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Tripling tobacco taxes: Key for achieving the UN Sustainable Development Goals by 2030

Prabhat Jha's picture

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World Bank Group / 2013


Since the World Health Organization (WHO) adopted the Framework Convention on Tobacco Control (FCTC) a decade ago, over 180 countries have signed the treaty. Progress has been made in expanding the coverage of effective interventions--more than half of the world’s countries, with 40% of the world’s population have implemented at least one tobacco control measure, and despite increasing global population, smoking prevalence has decreased slightly worldwide from 23% of adults in 2007 to 21% of adults in 2013. How can greater reductions in smoking be achieved in the next decade and contribute to reaching the health and social targets of the UN Sustainable Development Goals (SDGs) by 2030? We review some key issues in the epidemiology and economics of global tobacco control.

Smokers face a three-fold higher risk of death versus otherwise similar non-smokers, resulting in a loss of at least one decade of life. While the hazards of smoking accumulate slowly, cessation is effective quickly. People who quit by age 40 get back nearly the full decade of life lost from continued smoking; quit by 50, get back six years; quit by 60, get back four years. Cessation is now common among adults in high-income countries. For example in Canada there are over 1 million more ex-smokers than just a decade ago. However, due in large part to the marketing and pricing strategies of the tobacco industry, cessation remains a major public health challenge in most low and middle-income countries (LMIC) where 85% of smokers live.
 
Global annual cigarette sales rose from five trillion cigarettes in 1990 to about six trillion today. Cigarette production has increased by 30% in China since 2000, which consumes 40% of the world’s cigarettes. Global tobacco industry profits of about $50 billion – or $10,000 per tobacco death – enable it to access finance officials, fund pricing research, and run interference against tobacco control--summarised wonderfully by comedian John Oliver. Serious control of tobacco must counter these strategies on the basis of robust health, social and economic data that document the negative societal impact of tobacco use.

WHO has recommended a 30% reduction in smoking prevalence by 2025, which would avoid at least 200 million deaths by the end of the 21st century among current and future smokers. The only plausible way to reduce smoking to this extent would be to triple tobacco excise taxes in most LMICs. A tripling of the excise tax would roughly double the retail price and reduce tobacco consumption by about 40%. As of 2015, WHO reported that only 28 LMICs had comprehensive policies covering counter advertising, restrictions on public smoking, and on appropriately high taxes, and that few had made progress on raising taxes.

The common strategy of tobacco producers is to lobby governments to keep cigarettes affordable by keeping tax hikes below the rate of income growth, and by taxing different cigarettes at different rates to enable smokers to change to cheaper brands or lengths. Smart taxation needs to simplify taxes by adopting, ideally, a high, uniform excise tax on all types of cigarettes (both filter and nonfilter) to reduce downward substitution (let’s not forget, all cigarettes will kill you!). The Government of India has recently made modest tax reforms in this direction, the 2015 tobacco tax adjustment in China is reducing consumption and increasing fiscal revenue, and in 2016 World Bank teams supported the work of government teams in Armenia, Colombia, Moldova and Ukraine for the undertaking of comprehensive tax reforms that were approved by Parliaments, including reforms on tobacco tax structures and rate levels—additional work is being supported in other countries worldwide. Smart taxes can follow the example of Canada’s tax hike of about 5 cents a pack in 2014, as well as the Sin Tax Reform (both tobacco and alcohol) in the Philippines of 2012 that helped mobilize domestic resources to fund the expansion of universal health coverage. There have been other successes: Botswana, Ecuador, Mauritius, Mexico, and Uruguay, where local political champions, paired with expert taxation advice, achieved large tax hikes. South Africa also raised taxes in the last decade and has curbed consumption per adult by half.

Non-price interventions also play an important role as they help to reduce the social acceptability of tobacco use. Young American women took up smoking in large proportions in the 1960s and 1970s due in part to aggressive advertising (“The “Virginia Slims” epidemic”). Advertising bans or restrictions are likely one reason why young Chinese or Indian women have not yet done so. Australia has adopted plain packaging, and other countries are starting to follow this example. Simple questions on past smoking status to death certificates or to verbal autopsies could enable low-cost monitoring of the consequences of tobacco use in many populations.

Governments and international agencies with accumulated know how and expertise in data sciences such as the World Bank Group and OECD along with WHO could also help countries create accessible and independent sales, revenue and smuggling data sources as a basis for rational tobacco tax policy. Country finance officials should refuse advice from tobacco lobbyists to avoid falling into conflict of interest situations, as WHO recommends for health officials.

Implementing the FCTC more effectively in the next decade is required to raise cessation rates in LMICs. The World Bank recommended taxation as the core strategy in its 1999 publication, Curbing the Epidemic: Goverments and the Economics of Tobacco Control. Similar recommendations follow in recent reports on tobacco taxation by WHO, and by the International Monetary Fund. Building upon accumulated evidence and country experiences, a tripling of the worldwide excise tax might be the only way to achieve the 2030 UN Sustainable Development Goal of reducing non-communicable disease deaths by 30%!

Comments

Submitted by Teh-wei Hu on

Raising tax on cigarette is the one of the most effective tobacco control policies. For achieving the UN sustainable development goal by 2030, we not only need to raise the tax on cigarette, but also encourage the government to use portion of the additional tobacco tax revenue to support other non-price control interventions.

Submitted by Ulysses Dorotheo on

Sustainable development requires good health of individuals, communities, and nations, but the goal of reducing premature deaths caused by non-communicable diseases will not be attained unless tobacco use is significantly reduced in all countries, particularly China, India, and many low- and middle-income countries. The best way to make this happen is by fully implementing the WHO Framework Convention on Tobacco Control. If and when major tax increases that reduce affordability of tobacco products are implemented by a majority of countries in line with the FCTC Article 6 guidelines, then we shall start to see major improvements in global health. Allocating tobacco tax revenues for tobacco control and health promotion will accelerate the process towards better health and should be a no-brainer for governments.

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