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A call for higher taxes on tobacco

Dr Margaret Chan, Director-General of WHO
Michael R. Bloomberg, mayor of New York from 2002 to 2013

Commentary
2 October 2015

For the first time, the new global Sustainable Development Goals currently being negotiated at the United Nations will treat tobacco use – and the chronic diseases it causes – as a development issue. It’s about time.

Dr Margaret Chan
WHO

Around the world, some 6 million people die every year from a tobacco-related disease. That’s equivalent to 1 person every 6 seconds, or 10 people every minute. By 2030, it’s expected that 8 million people a year will die from tobacco use – and 80%of those deaths will occur in developing countries. In the United States of America alone, smoking related illnesses result in US$170 billion in medical care spending each year.

Yet the cause of these problems – tobacco sales – could also contribute to a solution. The tobacco industry, which generates more than US$35 billion in annual profits, ought to bear the costs it inflicts upon society. And there is a straightforward way to ensure that it does: taxation. Why, after all, should governments effectively subsidize tobacco companies by picking up the tab for the health care costs they generate?

Increasing taxes on cigarettes and other tobacco products has mostly been a strategy for reducing usage – and it has proven incredibly successful. The evidence is clear that raising tobacco taxes cuts usage, encourages smokers to quit and discourages young people from picking up the habit in the first place. In fact, the most price-sensitive demographic for tobacco use is young people, who tend to have less disposable income. Low-income populations are also sensitive to prices increases, making tobacco taxes especially effective in poorer countries where tobacco use is rising fastest.

Bloomberg

Those same countries also face the greatest need for better health care services. Tobacco taxes, in addition to reducing the burdens on health care systems, can help countries absorb the huge costs that tobacco usage imposes upon them. Fortunately, governments from around the world have begun waking up to the idea that tobacco taxes provide an opportunity to achieve both of those critical goals: reducing usage and raising revenue. In countries as different as South Africa, France and New Zealand, tobacco taxes have helped to cut tobacco use and provided funding for health care.

In 2012, for instance, the Philippines passed its landmark Sin Tax Reform Law. This legislation, which increased tax rates on low-priced cigarette brands by more than 300%, uses the revenue that is generated to finance the country’s universal health care insurance program. By 2014, the government was able to subsidize the health insurance premiums of approximately half of the population by using these funds.

The tobacco industry, of course, rejects the idea that that it should pay for the long-term chronic health costs their products generate, and it is working hard, directly and through front groups, to persuade governments to go easy on taxes. If any other consumer product was known to kill 1 in 2 of its users, there would be calls on governments to ban it and demands that the companies be prosecuted. Yet in much of the world, tobacco is only lightly regulated and taxed.

This is despite the fact that tobacco taxes have already been formally endorsed by governments representing 90% of the world's people, through a legally binding global treaty – the WHO Framework Convention on Tobacco Control (FCTC) - as an important and effective means to reduce tobacco consumption. The FCTC even provides guidelines for governments to put in place to strengthen tobacco taxes.

If the primary role of government is to protect lives – and we believe it is – then tobacco taxes are an essential tool. The UN ought to encourage countries to raise tobacco taxes to support the world’s development goals and reduce tobacco use.


This commentary first appeared in the Washington Post on 2 October 2015.