Blogpost: Can Earmarking of Tobacco Tax Revenue Improve Public Finance for Health

Blogpost: The predictability of cigarette consumption
August 1, 2018
map Eastern Europe
Blogpost: Is Eastern Europe a Smoker’s Paradise?
September 12, 2018
Tobacco Tax

By Bertha Bangara

Globally, countries face challenges to finance the ever-strained health budgets to meet challenges of preventing the growing prevalence of most non-communicable diseases (NCDs) (WHO, 2016; WHO, 2010). In low and middle-income countries (LMICs), the case is significant with nearly 80% of all NCDs deaths occurring in these countries (ibid). Of the 57 million deaths that occurred globally in 2008, almost two thirds were due to NCDs, comprising cardiovascular diseases, cancers, diabetes and chronic lung diseases.

The combined burden of these diseases is rising fast among lower income countries imposing large human, social and economic costs (WHO, 2010). Since the health risks of smoking became generally known, the world has seen a proliferation of anti-smoking campaigns and the institution of smoking-related policies, including increasing taxes on cigarettes. Over the years, increases in tobacco taxation are acknowledged to be one of the most effective tobacco control interventions (Vardavas, et. al., 2012).

Excise taxes on cigarettes, alcohol and other products have for a long time been a dependable and significant revenue source in many countries. More recently, considerable attention has been paid to the way in which these taxes may also be used to attain public health objectives while reducing consumption of products with adverse health and social impacts (Bird, 2015). Some countries have explicitly argued for the taxation of tobacco and other unhealthy products through well-designed and well-administered tax policy systems, and earmarking these excise taxes on harmful products to finance public health expenditures (WHO 2016). This is because increasing such taxes can be more politically acceptable if they can be used to provide the needed funding to increase government expenditures that can improve the lives of many people, especially the poor (Bird, 2015).

But to date, the debate on whether earmarking of tobacco tax revenues for health is the best way of handling sin taxes remains an issue. Whether earmarking of tobacco tax revenues can improve public health and service delivery in most LMICs continue to draw a considerable attention throughout literature. It is this part of literature that I am focusing on, by presenting international experiences with earmarking of tobacco and alcohol tax revenue for health while drawing lessons from earmarking countries on how to successfully earmark tobacco and tax revenues for health especially in LMICs.