Generating Revenue & Cutting Costs The Health & Economic Benefits of Tobacco Control

Transcription

1 Generating Revenue & Cutting Costs The Health & Economic Benefits of Tobacco Control Frank J. Chaloupka, University of Illinois at Chicago Ministerial Leadership in Health Harvard University, 19 April

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3 Health & Economic Consequences of Tobacco Use

4 Leading Causes of Death Globally Source: World Economic Forum & Harvard School of Public Health, 2011 Other Conditions include communicable diseases, maternal/perinatal conditions, and nutritional deficiencies

5 NCD Source: WHO, 2014

6 NCDs: Major Risk Factors Major NCD Heart Disease & Stroke Major modifiable causative Risk Factors Tobacco Use Unhealthy Diet Physical Inactivity Harmful Use of Alcohol Diabetes Cancer Chronic Lung Disease Source: WHO, 2010; Mackay, 2012

7 Prevalence of Current Tobacco Smoking, % 34.1% 32.7% 30% 29.7% 28.8% 26.3% Percent Current Tobacco Smokers 25% 20% 15% 10% 19.1% 8.9% 12.4% 17.6% 16.3% 18.8% 14.1% 17.5% 10.3% 5% 4.8% 4.7% 6.3% 6.2% 6.4% 6.1% 3.1% 0% 0.5% 0.5% Burkina Faso Ethiopia Ghana Jamaica Malawi Mozambique Sri Lanka Uganda 0.4% Male Female Total Source: WHO 2015

8 Economic Consequences of NCDs Large economic burden from NCDs: Considerable, growing health care costs from treating NCDs Significant lost productivity Cause of poverty Account for much of socioeconomic inequalities in

9 Smoking-Attributable Spending as Share of Total Health Expenditures, 2012, by Income Group and WHO Region Source: Goodchild, et al., forthcoming

10 Economic Costs of Smoking-Attributable Diseases as Share of GDP, 2012, by Income Group and WHO Region Source: Goodchild, et al., forthcoming

11 Tobacco Control Evidence-based interventions that address demand for and supply of tobacco MPOWER most effective and costeffective strategies: Monitor Protect Offer Warn Enforce 11

12 Key Tobacco Control Policies Cost-Effectiveness $6,000 $5,000 Cost per DALY Averted $4,000 $3,000 $2,000 $1,000 $0 Increased taxation Comprehensive advertising ban Clean indoor air laws Information and labelling Nicotine Replacement therapy High Income Upper Middle Income Lower Middle Income Low Income Source: WHO, unpublished data

13 Tobacco Taxation

14 Tobacco Taxation We [] have a package of six policy measures, known as MPOWER, that can help countries implement the provisions in the Convention. All six measures have a proven ability to reduce tobacco use in any resource setting. But tobacco taxes are by far the most effective. Director General Dr. Margaret Chan, WHO

15 Tobacco Taxes & Tobacco Use Increases in tobacco excise taxes that increase prices result in a decline in overall tobacco

16 27,000 Cigarette Price & Consumption Hungary, , Inflation Adjusted , , Million Sticks 21,000 19, Price, 2011 Forints/Pack 17, , , Consumption, Million Sticks Price, 2011 Forints Linear (Consumption, Million Sticks) Linear (Price, 2011 Forints) Sources: EIU, ERC, and World Bank

17 Tobacco Taxes and LMICs The demand for tobacco products in lower-income countries is at least as responsive to price as is the demand for tobacco products in high-income

18 Tobacco Taxes and Prevalence of Tobacco Use Increases in tobacco excise taxes that increase prices reduce the prevalence of adult tobacco

19 Adult Prevalence & Price, Brazil 16 Adult Smoking Prevalence and Cigarette Price Brazil, Inflation Adjusted, Adult Smoking Prevaleence Price per Pack, 2013 BRL Sales, Million Sticks Price per Pack, 2013 BRL Sources: Ministry of Health, Brazil; EIU; World Bank

20 Tobacco Taxes and Cessation Increases in tobacco excise taxes that increase prices induce current tobacco users to quit.

21 Taxes, Prices & Smoking Cessation 200,000 Monthly Quit Line Calls, United States 11/04-11/09 4/1/09 Federal Tax Increase 150,000 1/1/08 WI Tax Increase 100,000 50,

22 70 Cigarette Prices and Cessation US States & DC, 2009 % Ever Smokers Who Have Quit y = x R² = Average price (in cents) Source: BRFSS, Tax Burden on Tobacco, 2010, and author s calculations

23 Tobacco Taxes and Youth Tobacco Use Increases in tobacco excise taxes that increase prices reduce the initiation and uptake of tobacco use among young people, with a greater impact on the transition to regular use.

24 Tobacco Taxes and Youth Tobacco Use Tobacco use among young people responds more to changes in tobacco product taxes and prices than does tobacco use among adults.

25 Cigarette Price and Youth Smoking Prevalence United States, $ Price per pack (8/11 dollars) $4.75 $ Smoking Prevalence $ $ Year Cigarette Price 12th grade prevalence 10th grade prevalence 8th grade prevalence 6 Source: MTF, Tax Burden on Tobacco, 2011, and author s calculations 25

26 Tobacco Taxes and Low- Income Populations In many countries, tobacco use among lower-income populations is more responsive to tax and price increases than is tobacco use among higherincome

27 Who Pays& Who Benefits Turkey, 25% Tax Increase 9% 8.5% 9.7% 4% -1% -6% -2.2% -11% -16% -21% -20.4% -18.5% -26% -31% -36% -35.3% Change in Consumption Change in Taxes Paid Source: Adapted from Önder & Yürekli, 2014

28 Tobacco Taxes & Affordability To achieve public health goals, tobacco tax and price increases need to reduce the affordability of tobacco

29 Affordability and Tobacco Use Bangladesh, A f f o r d a b i l i t y ( = 1 ) P e r C a p i t a C o n s u m p t i o n Affordability Per Capita Consumption Source: Euromonitor, 2011

30 Cigarette Affordability, 2014 and Change, Uganda Sri Lanka Mozambique Jamaica Guyana Guinea Bissau Ghana Gabon Ethiopia Côte d'ivoire Burkina Faso Bahamas 0% 2% 4% 6% 8% 10% 12% 14% 16% % of per capita GDP to buy 100 packs of most popular brand Source: WHO 2015

31 Tobacco Taxes and Population Health Tobacco tax increases that increase prices improve population

32 France: smoking, tax and male lung cancer, # cigarettes/adult/day Number/adult/day and death rates Lung cancer death rates per 100,000 (divided by four): men age Relative price Price (% relative to 1980) Source: Jha, in progress

33 Tobacco Tax Structure Higher and more uniform specific tobacco excise taxes result in higher tobacco product prices and increase the effectiveness of taxation policies in reducing tobacco use.

34 Excise tax structure: Specific and mixed relying more on the specific component tend to lead to higher prices Source: WHO, 2015

35 Types of Cigarette Excise Taxes, 2014 Source: WHO 2015

36 Summary of Tax Structures Specific Uniform Price Excise Share Total Tax Share Bahamas Ad Valorem Tiered $ % 42.9% Burkina Faso Ad Valorem Tiered $ % 32.2% Côte d'ivoire Ad Valorem Uniform $ % 26.1% Ethiopia Ad Valorem Uniform $ % 18.8% Gabon Ad Valorem Uniform $ % 34.8% Ghana Ad Valorem --- $ % 28.3% Guinea Bissau Ad Valorem Uniform $ % 19.1% Guyana Specific Uniform $ % 25.2% Jamaica Specific Uniform $ % 42.9% Malawi Specific Tiered $ % 20.7% Mozambique Mixed/Specific Tiered $ % 30.9% Sri Lanka Specific Tiered $ % 36

37 Tobacco Tax Levels WHO Best Practice : set tobacco excise tax levels so that they account for at least 70 percent of the retail prices for tobacco products Update of World Bank yardstick of any taxes accounting for 2/3 to 4/5 of retail prices Well above where most countries are currently Further increases in countries that do reach this target

38 Weighted average Price of the Most Sold Brand & Taxes per Pack By Income Group 2012 Source: WHO 2015

39 Cigarette Taxes & Prices, % % 70.00% Tax/Price per Pack, Most Popular Brand, PPP % 32.2% 26.1% 18.8% 34.8% 28.3% 19.1% 25.2% 42.9% 20.7% 30.9% 45.1% 60.00% 50.00% 40.00% 30.00% 20.00% Total Tax Share of Price % % Net-of-Tax Price Specific Tax Ad Valorem Tax Other Taxes Total Tax

40 Tobacco Taxes and Tobacco Tax Revenues Tobacco tax increases increase tobacco tax revenues.

41 South Africa - Taxes, Prices, and Tax Revenues, , Inflation Adjusted Rand per Pack Tax Revenues, Million Rand Industry Price Excise Tax VAT Excise Tax Revenues

42 Earmarking Tobacco Tax Revenues Using a portion of tobacco tax revenues to support other tobacco control and/or health promotion efforts Increases the health impact of tobacco tax increases Increases public support for tax increases Including among many smokers

43 State Tobacco Control Program Funding and Youth Smoking Prevalence, United States, $1, Total Funding $Millions (FY10 dollars) $800 $600 $400 $ Percent Current Smoking $ Year 19 total state program funding high school prevalence Source: ImpacTeen Project, UIC; YRBS

44 Support for Earmarked Taxes Source: WHO 2015

45 Earmarked Tobacco Taxes 45

46 Earmarked Tobacco Taxes 46

47 Tax Avoidance & Tax Evasion Tax avoidance and tax evasion reduce, but do not eliminate, the public health and revenue impact of tobacco tax increases.

48 Combating Illicit Tobacco Trade Illicit trade protocol to the WHO FCTC Currently in process of being signed/ratified: Gabon, Sri Lanka have ratified; Burkina Faso, Côte d Ivoire, Ghana and Guinea Bissau have signed Provisions calling for: Strong tax administration Prominent, high-tech tax stamps and other pack markings Licensing of manufacturers, exporters, distributors, retailers Unique identification codes on packages Better enforcement Increased resources; Focus on large scale smuggling Swift, severe penalties Multilateral/intersectoral

49 Summary

50 Summary Considerable health and economic consequences from tobacco use Tobacco control has positive economic impact Healthier, more productive labor force, reduced costs Tobacco control interventions are cost-effective Sizable tobacco tax increases most effective and cost-effective option for reducing tobacco use and its consequences Improve public health while raising revenues

51 For more information: Tobacconomics