“Death and poverty are avoidable, but not tobacco taxes.” With this challenging statement, Prabhat Jha, Founding Director of the Centre for Global Health at St. Michael’s Hospital in Toronto laid out the most simple, cost-effective, and powerful intervention for charting a healthier future. Dr. Jha’s presentation at CGD summarized the latest research on the death toll associated with smoking (five million deaths a year and growing); the lost years of life (10 years on average for both men and women); the benefit of quitting (people who quit before the age of 40 reduce their expected loss of life years by 90%); and the expected increase in tobacco deaths in low- and middle-income countries (by 2030, 30% of middle age deaths in China are likely to be related to tobacco).
The disease burden associated with tobacco is not only large, it is fundamentally unnecessary. Referring to his article in the New England Journal of Medicine, Dr. Jha argued that tripling tobacco taxes could save 200 million people from premature death in the next few decades – a public health measure which has the added bonus of generating revenues. Contrary to common wisdom, tobacco taxes are not regressive in the following sense: the poor get more health gains from such taxes than the rich, while the bulk of tax revenues come from the rich rather than the poor.
By combining tax hikes and other measures like banning smoking in public places and restricting advertising, many countries have shown that the epidemic of smoking can be reversed. It took the US and the UK thirty years to halve the rates of smoking in their countries. France achieved the same success in only 15 years. Brazil and South Africa have also made substantial gains against smoking-related deaths by raising tobacco taxes.
I’ve blogged before about how organizations like the World Bank and the International Monetary Fund (IMF) are uniquely positioned to catalyze greater use of high-impact tobacco control measures in low- and middle-income countries (here, here and here). The IMF supports countries that want to raise tobacco taxes by providing guidance on which taxes are most effective (specific taxes adjusted with inflation), how to improve tax administration, and guidance on controlling smuggling. The World Bank has mobilized staff working on fiscal and macroeconomic policy to work with its health staff on supporting tobacco taxes as well. This work converged in the Philippines where, with support from the World Bank, IMF, and Asian Development Bank, the government enacted taxes which almost doubled the price of tobacco – a move which can predictably save millions of lives. Christine Lagarde, managing director at the IMF, provided statements in support of the tax law when it was being debated.
The question in my mind is: if the evidence is so strong, the technical expertise is available, and several countries have shown the way, why are tobacco taxes still so low around the world? Raising tobacco taxes is a win-win. Every 10 percent increase in tobacco taxes on average reduces consumption by 4 percent, meaning that it saves lives and generates sorely needed revenues. It would take very little for World Bank President Jim Kim and IMF Managing Director Christine Lagarde to make a joint statement and bring these facts to the attention of governments around the world, making it clear that countries requesting support will get the full backing of the international community.
Ultimately each country has to take their own action. But Dr. Jha demonstrated that if we make tobacco taxes inevitable, we can avoid a lot of death and poverty. International agencies are supportive, but not visibly enough.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise.
CGD is a nonpartisan, independent organization and does not take institutional positions.
