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Global Tax Program

Health Tax

What is the problem?

More than 11.4 million premature deaths annually – or 20.2 percent of all global deaths – could be prevented by reducing consumption of tobacco, alcohol and sugar sweetened beverages (SSBs)1.

The cost of treating Non-Communicable Diseases (NCDs) associated with consumption of unhealthy products can drain both household, and government resources. Deepening negative impacts, conditions associated with excessive consumption of these products have been identified as risk factors for COVID-19, increasing the burden on society and already buckling health systems.

Why health taxes?

Health taxes are excise taxes imposed on products that have a negative public health impact (e.g., taxes on tobacco, alcohol, SSBs).  As a policy tool, taxation is an effective way to tackle consumption of these products: higher rates can lead to higher prices, and decline in affordability will both curb use and raise revenue.

Over the next 50 years, a 50% tax induced price increase of tobacco, alcohol and SSBs is expected to avert up to 60 million deaths and add up to an additional 1.4 billion life years, with 87% and 84%, respectively, in LMICs.

On the revenue side, it is projected that the same 50% tax induced price increase of tobacco, alcohol and SSBs is expected to raise up to USS$ 25.8 trillion (in 2018 terms) in additional tax revenue with 57% accruing to LMICs. Health taxes can produce not just more, but higher quality revenues as a part of building back better: generating resources even in low-capacity environments, increasing labor productivity, and reducing healthcare burden.

Why this program?

Knowledge and learning around health taxes needs to be built on both the health and fiscal sides, including bolstering specific expertise amongst those who manage tax systems. This requires focusing on all three critical dimensions - policy, administration and monitoring - to ensure that reforms can be executed to meet desired outcomes. Embedded in the Global Tax Program (GTP) the new Health Tax Window is a 3 year, $7.5 million program funded by the Government of Norway and Bloomberg Philanthropies that will leverage GTP expertise on taxation, as well as multi-sectoral partners from within and outside the World Bank.

Country work.  The program will focus on responding to country requests for support on policy, administration and monitoring of health tax reforms. This will include technical assistance ranging from deep engagements to just in time support, while documenting implementation experience in countries as a contribution to global knowledge.

Global work. In collaboration with others already working in this space, the program will undertake a demand driven set of capacity building activities including workshops, guidance notes, and trainings; and build a co-developed research agenda and network of expertise that aims to nurture cross support and collaboration between global and local experts.

 

1 2019 IHME Global Burden of Disease Data