Using Fiscal Policy to Promote Health: Taxing Tobacco, Alcohol, and Sugary Beverages

Non-communicable diseases (NCDs) impose enormous economic costs, in addition to their impact on public health. The World Economic Forum recently called NCDs “a real threat not only to human health but to global prosperity,” with the cumulative direct and indirect economic costs of NCDs, during the period 2016-2030, estimated at $140 trillion.ii The health and economic burden of NCDs has increasingly shifted from high-income countries (HICs) to low- and middle-income countries (LMICs).iii The threat of NCDs to development resulted in the United Nation’s Agenda for Sustainable Development to include a commitment from governments to reduce the premature mortality from NCDs by one-third by 2030.

This paper is a background supplement to the Bloomberg Philanthropies Task Force on Fiscal Policy for Health report, Health Taxes to Save Lives: Employing Effective Excise Taxes on Tobacco, Alcohol, and Sugary Beverages, prepared by Frank Chaloupka and Lisa Powell. The paper highlights how excise taxation can be used to raise prices, curb unhealthy consumption, promote health, and, in turn, enhance economic growth. It concludes with a brief summary that lays out the rationale for raising excise taxes that can provide both health and fiscal benefits of reducing consumption of tobacco, alcohol and sugary beverages.