One of the biggest challenges of health policy initiatives is that even when they produce a dramatic positive impact on human health—such as the spectacular gains in lives saved by providing drugs for people living with HIV—a government’s economic returns on investment are almost always indirect, long-term, and difficult to measure.
But as policymakers in the Philippines can attest, there is a tobacco control policy that not only improves people’s health, but also generates immediate, quantifiable monetary benefits. That policy is taxing tobacco products at a level that discourages smoking. The Philippines, where almost half of men smoke tobacco, recently enacted a new tobacco tax that took effect last year. It will not only reduce deaths in the current population by an estimated 3.54 million, but was also designed to generate US $569.91 million in government revenue in its first year alone. The revenue is being reinvested in health programs and promoting alternative livelihoods for tobacco farmers and workers.
The boost to the healthcare system enabled by the tax revenues is particularly beneficial to the poorest Filipinos. Additionally, as tobacco is disproportionately consumed by the poor around the world, increased tobacco taxes reduce the disproportionate health burden of tobacco use among low-income people.
Of policy measures to reduce tobacco use, “tobacco taxes are by far the most effective,” World Health Organization Director General Margaret Chan has stated, and this view is echoed by leaders throughout the global health and development community. “A tax on tobacco is the single most powerful lever for curbing chronic diseases and could raise significant public revenue for basic health care,” wrote Larry Summers and Gavin Yamey, of The Lancet Commission on Investing in Health. The World Bank’s new health director, Tim Evans, includes excise taxes on tobacco among his priorities.
The Philippines is not the only country where policymakers are reaping the rewards of taxation as a tobacco control strategy. Senegal passed one of Africa’s strongest tobacco control laws this year, and it includes language stating that tax measures should contribute to tobacco control. Botswana’s tax on cigarettes was already among the highest in Africa before it introduced a new tax levy this year.
Tobacco tax reform in these and other countries is facilitated by experts at local and global organizations like our partners, the WHO, the Southeast Asia Tobacco Control Alliance (SEATCA), and the University of Cape Town, who provide evidence on the effectiveness of tax policies, and advise on improving country tax systems. Partners like the Campaign for Tobacco-Free Kids focus on evidence-to-action.
Despite the implementation of strong tax policies in some countries, there is much more to be done. WHO recommends that for the greatest public health impact, taxes should constitute at least 70% of the retail price of cigarettes. The global average is currently just 58.4%, and it is lower in low- and middle-income countries, where the tobacco industry is focusing its marketing efforts. Nearly 6 million people die from tobacco-related illness each year – deaths that can be prevented with strong tobacco control policies like taxation.
Tomorrow we and our partners will be commemorating World No Tobacco Day, and congratulating governments that have followed the example of Philippines, Senegal, Botswana, and other countries committed to lowering death and disease by raising taxes on tobacco.
To learn more, visit the World Health Organization's Tobacco Free Initiative site.