Taxes to improve health don’t negatively affect the poor

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  Last updated April 4, 2018 at 5:09 pm

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The poor would benefit from higher taxes on unhealthy products, according to new analysis.



Taxes on soft drinks, alcohol and tobacco are a powerful response to rising rates of non-communicable diseases (NCDs) with the poorest in society likely to receive the greatest benefit, according to new research.


Five complementary papers prepared by The Lancet Taskforce on NCDs and economics analyse data on expenditure, behaviour and socio-economic status and argue that taxes on unhealthy products have the potential to produce major health gains among the poor, who are disproportionately affected by NCDs.


The authors suggest the evidence helps counter fears that such taxes will necessarily disproportionately harm the poor.


“Non-communicable diseases are a major cause and consequence of poverty worldwide,” said the Taskforce Chair, Dr Rachel Nugent, from RTI International , Seattle. “Responding to this challenge means big investments to improve health care systems worldwide, but there are immediate and effective tools at our disposal.


“Taxes on unhealthy products can produce major health gains, and the evidence shows these can be implemented fairly, without disproportionately harming the poorest in society.”


Taxes tackle the big killers


NCDs such as stroke, heart disease, diabetes, chronic respiratory disease and cancer are responsible for 38 million deaths each year, 16 million of them among people aged under 70.


The reports say high-quality evidence from 283 international studies shows that low socio-economic status is consistently associated with higher rates of NCDs in low and middle income countries. Evidence from 66 studies on 13 chronic diseases concludes that NCDs place a substantially higher economic burden on low income households, especially in the absence of health insurance.


Even with protective health insurance, high levels of co-pays or a lack of coverage for specific treatments mean households can often experience catastrophic expenditure. In China, for example, 37 per cent of stroke patients are impoverished from paying for medical treatment.


“Poverty and economic hardship have many causes, but this major body of evidence highlights the ruinous and long-term economic burdens of non-communicable diseases on households,” said author Professor Stephen Jan, from Sydney’s George Institute for Global Health.


“An important policy response is to provide financial protection through tax-financed health care and social health insurance programs, and within these programs, provide for the subsidisation of interventions that are cost-effective.”


Harm to low income households is overstated


The Taskforce’s analysis was based on data from 13 countries (Chile, Guatemala, Panama, Nicaragua, Albania, Poland, Turkey, Tajikistan, Tanzania, Niger, Nigeria, India and Timor-Leste).


It found that:



  • high income households generally spend more on alcohol, soft drinks and snacks than low income households, but patterns for tobacco are less consistent

  • as a proportion of total household expenditure, low income households tend to be more greatly affected by price changes compared to high income households, although the effect varies

  • low income households respond to price changes more readily than higher income households.


In the UK, for example, the response to the possible introduction of a minimum price for alcohol was estimated to be 7.6 times larger in the poorest households than in the wealthiest. In Mexico, the introduction of a soft drink tax resulted in an average of 4.2L less of soft drinks purchased per person, with a 17 per cent decrease in purchases among lower income groups, and almost no change in higher income groups.


“The evidence suggests that concerns about higher taxes on tobacco, alcohol, and soft drinks harming the poor are overstated,” Dr Nugetn said.


“Some degree of taxation on tobacco is common in many countries, and while we are starting to see progress on alcohol taxes, there is much more governments should be doing – in both high and low-income countries – to consider the careful introduction of taxes on other unhealthy products like soft drinks and snacks. Price policies such as taxes will be a key part of the response to rising rates of non-communicable diseases.”


The papers published in The Lancet.


Related


Sugar tax on soft drinks can drive up alcohol consumption


Experts react to alcohol industry concealing cancer links


Sugary drinks take toll on Indigenous health




About the Author

Nick Carne
Nick Carne is the Editorial Manager for the Royal Institution of Australia.

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