These days, you may think that saying the words "let's raise taxes" won't make you the most popular person at various gatherings. But what if you could tell others that raising taxes could end up saving and even generating them money along with preventing health problems and deaths? Wouldn't they call that a "win, win" situation?
That's essentially what the Task Force on Fiscal Policy for Health found if taxes were raised for three types of products: tobacco, alcohol and sugary beverages. Their report "Health Taxes: A Compelling Policy for the Crises of Today" just released on September 24 described what could happen if such taxes were raised so that prices of these products would be increased by 50% around the world. Such higher prices could discourage the use of these products and thus prevent the noncommunicable diseases or NCDs that tobacco, alcohol and sugary beverages may cause. At the same time, doing so could end up generating an additional $3.7 trillion in revenue over the next five years. And having an extra several trillion dollars available could be kind of helpful.
The words "win, win" and sometimes even "win, win, win" did come up multiple times during a convening in New York City on September 24 to discuss the findings of this report. All three co-chairs of the task force -- founder of Bloomberg Philanthropies and the World Health Organization Global Ambassador for Noncommunicable Diseases and Injuries Michael R. Bloomberg, Prime Minister of Barbados Mia Amor Mottley and economist Larry Summers -- delivered remarks at the convening. The convening also included panel discussions with several Ministers of Health. Bloomberg emphasized how "Taxing products harmful to our health has proven to be a highly effective way to reduce death and disease, while also raising revenue that governments can use to improve public health."
The death and disease referred to here is from NCDs, the leading cause of death around the world by far. Each year NCDs kill around 41 million people, which amounts to about 74% of all deaths, according to the WHO. This includes around 17.9 million deaths from cardiovascular disease, 9.3 million from cancers, 4.1 million from chronic respiratory diseases and 2.0 million from diabetes annually. Low and middle income countries disproportionately account for this burden with 86% of premature deaths from NCDs occurring in LMICs.
And the continuing use of tobacco, alcohol and sugary drinks ain't helping. Numerous scientific studies have shown how this not-so-wholesome-threesome can increase the risk of developing NCDs and dying from them. In fact, some of the harm from these products can extend beyond the users as anyone who's spent too much time inhaling second-hand smoke from cigarettes may tell you. "This is the externalities problem, that consumption of these things harm other people," explained Pete Baker, the deputy director of the global health policy program at the Center for Global Development who co-authored a recent CGD report entitled "Health Taxes in the Polycrisis Era." In other words, everyone else is already paying for those who are currently consuming these products.
Plus, you may not even realize that you've been drinking from potential vats of harm. Sugary beverages don't just encompass sodas. They include any beverage that's been sweetened by something with calories like sports drinks, energy drinks and sweetened water. Be careful when reading ingredient labels, because these sweeteners can remain somewhat hidden with innocent-sounding names like honey, kind of like how people having affairs check in hotels under assumed names.
The report provided evidence of how taxes on these products can reduce their consumption. In case you were wondering about the effects of tobacco taxes, the report offered a case study from the Philippines, where four successive reform bills enacted by the Benigno Aquino III and Rodrigo Duterte administrations since 2012 have raised excise taxes for tobacco. This ended up increasing tobacco prices six-fold by 2020, which was accompanied by decreases in smoking prevalence among adults.
This latest Task Force report also harkened back to their 2019 inaugural report, which presented data that showed how sugary beverage taxes have led to reduced sales of the stuff. Sixteen different locations that had implemented sugary beverage tax policies experienced on average 15 percent drops in the sales of such products. And before you assume that people simply got their sugar highs from other foods, chew on this: these locations didn't see concomitant increased consumption of other high-calorie products. In fact, locations that have implemented such taxes have found subsequent improvements in oral health, obesity prevalence and body mass indices.
This may all sound great but the 2024 Task Force report also indicated that health tax policies have stalled or regressed since 2019. From 2016 to 2022, cigarettes had actually become more affordable in 41 countries and stayed just as affordable in 115, as tobacco companies have continued to aggressively market to young people, especially in LMICs. Meanwhile, alcohol consumption around the world has continued to go up and up. The Task Force found only 149 governments applying excise taxes on alcohol, compared to 183 for alcohol. In fact, alcohol has become even more affordable in most countries over time.
Then, there's the sugar on top of all of this. Sugar consumption as well as the consumption of sugary beverages has continued to trend upwards around the world, which is not a very sweet observation given the obesity and other health problems it can cause. Yet, the taxation rate for sugary beverages remains very low. More countries have adopted such taxes with 41 more countries doing so since 2018 to bring the total to at least 132 countries. But the number of places coming forward with such taxation strategies haven't exactly been bubbling over.
All of this leaves a lot of potential revenue unrealized. There's the aforementioned $3.7 trillion, which would divide into $2.1 trillion for low and middle-income countries and $1.5 trillion in high-income countries. Say you were allocated these revenues towards health. You could then see global government health budgets surge by 12 percent with per capita health expenditures in LMICs jumping from $160 to $224. Not too many people would argue against additional money for health. This is especially the case after what happened in 2020, when a little thing called the Covid-19 pandemic came along. "The big global story has been the pandemic and no money to fix the situation," Baker emphasized. "Governments have been facing very bad fiscal situations. Why not tax bad things? Otherwise, you have to raise other taxes."
Naturally, companies producing tobacco, alcoholic and sugary beverage products are going argue against such health taxes, claiming all sorts of bad effects from such taxes. They also have argued that people don't want such taxes. But the report offered a big au contraire to such arguments, pointing out how these oh-such-bad-effects arguments are not supported by, you know, that stuff called evidence and how surveys have consistently shown substantial support among the public for health taxes. "There is a need to have practical ways to essentially stand up to the interests in our society," Baker asserted. He also pushed back against the paternalistic arguments that manufacturers may have: "The people who would be taxed would be gaining the health benefits. This will end up falling most on the poor, not just the taxes but also the benefits."
Baker added, "Often British and American countries pushing tobacco in other countries, especially LMICs. It is our responsibility to manage our own industries."
Of course, health taxes shouldn't be the only thing done against NCDs and the use of tobacco, alcohol and sugary beverages. Prime Minister Mottley did emphasize during the convening, "[Health taxes] is not one size fits all. It is not the silver bullet." Nevertheless, she did say about the Task Force's work, "This work is about saving lives." But it shouldn't hurt to generate some -- or even a lot -- more money along the way too, right?