"Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, [but] which are ... objects of almost universal consumption, and which are therefore extremely proper subjects of taxation."
- Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)
World No Tobacco Day 2017 focuses on the links between tobacco use, tobacco control, and sustainable development. Does this mean that tobacco use is more than a public health issue? The answer is an emphatic yes, rooted in robust scientific evidence accumulated over the past five decades and country experiences worldwide. Let me explain.
While tobacco products are legal goods offered in the marketplace, their consumption, particularly cigarette smoking, is highly addictive, toxic, and deadly. Nicotine (a chemical in tobacco), tar (a partially combusted particulate matter produced by the burning of tobacco), and carbon monoxide (a colorless, odorless gas produced from the incomplete burning of tobacco) activate multiple biological pathways through which smoking increases risk for diseases of nearly all organs of the body. The WHO just released this week jarring new data – 7 million people a year are killed by smoking and other tobacco use each year, up from 4 million people at the turn of the century. Smokers who begin early in adult life and do not stop smoking face a three-fold higher risk of death compared to comparable non-smokers, resulting in a loss of at least one decade of life.
If global development is lifting lives within and among countries, it should be clear to all of us that ill health, premature death, and disability caused by tobacco use is a major obstacle to supporting the achievement of healthy, educated, productive, prosperous, socially engaged, and happy people. It also undermines economic development, as the total economic cost of smoking is estimated to exceed US$ 1.4 trillion per year, equivalent to 1.8% of the world’s annual gross domestic product (GDP).
So what can be done to further strengthen the global effort to deal with this development challenge?
This year’s World No Tobacco Day offers an opportunity for governments and societies across the world to recommit to implement strategies and plans that prioritize action on tobacco control, building upon ongoing efforts and achievements. The accelerated implementation of all demand-reduction measures, such as regulations to provide protection from exposure to tobacco smoke in public places, and to prohibit misleading tobacco packaging and labelling, as well as price and tax measures, along with raising public awareness of tobacco control issues, outlined in WHO’s Framework Convention on Tobacco Control (FCTC) since 2005 has already contributed to the decrease in smoking prevalence in 126 countries from 24.7% in 2005 to 22.1% in 2015. While all the interventions included in the FCTC need to be fully implemented, tobacco taxation demands increased attention and effort, as its implementation lags behind. Around the world, cigarette prices remain too low to discourage consumption. Only 33 countries impose taxes that constitute more than 75% of the retail price of a pack of cigarettes—the taxation level recommended to deter consumption.
Since price plays an important role in smoking and cigarette taxes play an important role in cigarette prices, raising taxes on tobacco products is one of the most cost-effective measures to reduce tobacco use, especially in low- and middle-income countries (LMICs) where smokers are more price-sensitive. Due to the addictive nature of tobacco products, more than just focusing on quantity of cigarettes consumed, particular attention needs to be placed on examining the impact of prices on smoking initiation, especially among children and adolescents, on quit attempts, and on the fraction of the population that smokes.
In redoubling the tobacco taxation effort, it is important to keep in mind that the positive impacts of higher tobacco taxes that lead to higher prices and reduced consumption extend well beyond direct health gains and indirect benefits such as higher productivity and reduced health care expenditures. As recognized in a recent publication by the International Monetary Fund (IMF), “In many countries, raising tobacco taxes can offer a “win–win”: higher revenue and positive health outcomes…. Of course, countries putting more weight on health objectives could raise taxes even further than the revenue maximizing point.”
Country experiences provide strong evidence that increasing tobacco taxes can contribute to accelerate domestic resource mobilization in line with the objectives set forth in the 2015 Financing for Development Addis Ababa Action Agenda. This is important, as augmenting a country’s tax base is critical to expand the fiscal capacity of governments to fund priority investments and programs, such as universal health coverage, education, safe water and basic sanitation, and road safety, to help countries achieve the Sustainable Development Goals (SDGs) by 2030.
On this World No Tobacco Day, those of us working at the World Bank Group should also reaffirm our commitment to “walking the walk and not only the talk” to help countries control the development threat posed by tobacco use. The unambiguous Operational Directive 4.76 of 1999 mandates that the World Bank Group does not lend directly to tobacco production, processing, or marketing; provide grants for investment in these activities; or guarantee investments, loans, or credits for these industries. World Bank Group policy advice and technical assistance support tobacco tax increases to protect the population from health risks and to mobilize additional fiscal revenue.
To advance the tobacco control agenda into the future, we should be guided by the realization that taxing tobacco is not only good for public health, but it is a fundamental policy measure that is necessary to help countries grow and develop for the benefit of the entire population.
Infographic: Stop Smoking: It's Deadly and Bad for the Economy
U.S. Department of Health and Human Services. 2014. “The Health Consequences of Smoking: 50 Years of Progress. A Report of the Surgeon General
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World Bank Group Global Tobacco Control Program
WHO World No Tobacco Day 2017