On the different types of taxes, excise taxes are the most important for promoting health because they change the cost of the taxed product relative to other goods.
Sugar-sweetened beverages (SSBs)
Fiscal policies that lead to at least a 20% increase in the retail price of sugary drinks would result in significant reductions in consumption of such products.
Alcohol
Specific taxes are more effective that ad valorem because it reduces the opportunities for industry to manipulate consumer behavior and the likelihood that consumers will simply substitute cheaper products for more expensive ones. Furthermore, specific taxes on alcohol content (instead of per bottle or drink volume) are even more effective because they lead to lower consumption, less initiation among the young, and encouraging industry to offer lower alcohol content beverages.
Tobacco
The best practices for tobacco taxation include the adoption of a relatively simple tax system that applies equivalent specific taxes to all tobacco products, with at least 70% excise tax share in final consumer price
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).
- 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.
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