Taxes on alcohol, tobacco would benefit the poor

5 Aprl 2018:

Levying taxes on tobacco, alcohol, soft drinks and snacks will benefit poorer households the most, a Lancet study has found.

Levying taxes on tobacco, alcohol, soft drinks and snacks will benefit poorer households the most, a Lancet study has found. According to the researchers, taxes are a powerful response to rising rates of chronic diseases and an inescapable solution to tackling non-communicable diseases (NCDs). While changing the price of unhealthy products alters consumption across the board, the impact differs due to socioeconomic status, they said.

The greatest health benefits from tax rises can be seen for people on a low income as they respond the most to price changes, and suffer disproportionately from chronic diseases. The study published in The Lancet journal shows that whilst wealthier households may face a bigger overall increase in expenditure when prices change, the burden is greater on lower income households because it represents a greater share of their overall spending.

“No amount of money, however small, is trivial for low income households, especially in low income countries,” said Franco Sassi, professor at Imperial College Business School in the UK. “However, the extra tax expenditures involved should not deter governments from implementing a policy that may disproportionately benefit the health and welfare of lower-income households,” said Sassi. Researchers looked at data from across the world on the impact of taxes on soft drinks, alcohol and tobacco.

In Mexico, a soft drinks tax was introduced in 2014 and purchases of taxed drinks reached a 12 per cent reduction by December of that year. This means that the average person was drinking more than four litres less of sugar-sweetened drinks that year and the greatest change was in the poorest households.

Researchers also modelled the impact of tax increases in different countries, and argued that any negative financial impacts can be mitigated by a “pro-poor” use of the revenues generated. Bringing together data from across the globe, researchers presented strong evidence that taxes on unhealthy products have the potential to produce major health gains among the poorest in society who are disproportionately affected by diseases such as cancer, heart disease and diabetes.

The evidence helps counter fears that such taxes will necessarily disproportionately harm the poor. Non-communicable diseases (NCDs) such as cancer, heart disease and diabetes are responsible for 38 million deaths each year, 16 million of these are among people aged under 70.

Source: Financial Express