Health taxes Impact

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

 

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.  

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