Health impact
Sugar-sweetened beverages (SSBs)
Taxing SSBs can lower consumption and encourage reformulation. It can reduce obesity, type 2 diabetes and tooth decay, especially for lower-income, less-educated and younger populations. Evidence shows that a tax on SSBs that increases the prices by 20% can reduce consumption by around 20%
Alcohol
Studies show that increasing the price of alcohol through higher taxes can reduce alcohol consumption and its related harms, and prevent drinking initiation.
Tobacco
Significant increases in the taxes and prices of tobacco products is the most cost effective measure to reduce tobacco use. This, combined with other tobacco control measures, such as advertising bans and public smoking prohibitions help ensures the effectiveness of tobacco control demand reduction measures.
Impact on health and revenue
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Impact on health and revenue
Revenue impact
Health taxes can potentially generate stable, predictable revenues in the short to medium term and reduce health care costs in the long term. Â
Revenues depend on variety of factors, including:
- Tax rate, structure and base
- How responsive consumers are to changes in price in the target commodities/ substitutes
- Industry pricing and production strategies
- Extent of tax avoidance and evasion
It important to account for these factors when projecting revenue impact of tax increases
Health taxes
- Health taxes are imposed on products that have a negative public health impact (e.g. taxes on tobacco, alcohol, sugar-sweetened beverages, fossil fuels).Â
- These taxes result in healthier populations and generate revenues for the budget even in the presence of illicit trade/evasion.
- These are progressive measures which benefit low-income populations relatively more, once health care costs and health burden are taken into account.Â
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