Death and taxes
Authors: Zoë Mullan
Journal: The Lancet Global Health (2015)

This week, delegates are gathered in Abu Dhabi, United Arab Emirates, for the 16th World Conference on Tobacco or Health. A large portion of the programme will be dedicated to global progress on demand reduction measures laid out in WHO's Framework Convention on Tobacco Control (FCTC), which celebrated its 10th birthday last month. Adopted at the 56th World Health Assembly in 2003, the treaty entered into force on Feb 27, 2005, and has now been ratified by 180 member states. It is regarded as a thoroughly successful piece of global health legislation, both in terms of outcomes and process. Yet success has been unevenly distributed, both across the world and across components of the treaty. MPOWER—the set of measures introduced by WHO in 2008 to facilitate implementation of FCTC interventions—covers monitoring of tobacco use and prevention policies; protection of people from tobacco smoke; offering help to quit tobacco use; warning about the dangers of tobacco; enforcing bans on tobacco advertising, promotion, and sponsorship; and raising taxes on tobacco. The latter is the measure with the most potential influence on tobacco consumption and yet the least compliance worldwide. A modelling study estimated that price increases led to the aversion of 3·5 million smoking-attributable deaths between 2007 and 2010 in the 14 countries that had raised taxes to the recommended 75% of final retail price (around ten times more deaths averted than by offering help to quit tobacco use and by enforcing marketing bans). Similarly, a review by the International Agency for Research on Cancer showed that a 50% increase in tobacco prices can reduce consumption by about 20%. However, the latest MPOWER progress report indicated that only 8% of the world's population was covered by a sufficiently high taxation policy in 2012 (compared with 15% for cessation programmes and 10% for advertising bans) and that this element had shown the least progress since 2010. Excise tax (ie, that paid per quantity or weight) is the most effective type of taxation in terms of demand reduction because it is less open to manipulation than taxes based on price (for which the manufacturer can effectively lower the tax by lowering the price of the product). However, some of the world's biggest consumers of tobacco products have a particularly low reliance on excise tax. China, home to nearly a third of the world's smokers, imposes an excise tax of just RMB 0·06 per pack (1% of the average price of RMB 5·0 per pack). A further price-variable tax takes the total up to an average of about 40%. The state-owned China National Tobacco Corporation produces 98% of China's cigarettes, a monopoly so important as to be protected by its own government agency—the State Tobacco Monopoly Administration. Since tobacco sales represent such a large revenue source for the Chinese Government, it is perhaps unsurprising that efforts to decrease consumption via increased excise tax have been less than forthcoming. However, the reason for China's reluctance is purportedly a concern that excessive taxation could be regressive—ie, hit poorer smokers harder than more well off ones. An Article in this month's issue puts that argument to rest. Stéphane Verguet and colleagues used extended cost-effectiveness analysis to estimate the effect of a 50% increase in tobacco price through excise tax in China on years of life gained and financial consequences for households. By looking at the findings by wealth quintile, they were able to demonstrate a pro-poor effect. Verguet and colleagues estimate that, after 50 years, a third of the 231 million years of life gained overall would be in the poorest group, household expenditures on tobacco would drop by $21 billion in the poorest quintile (compared with increases in other quintiles), and expenditures on tobacco-related disease would reduce by $24 billion overall (28% of which would be in the poorest group). China should take a (tobacco) leaf out of the book of its fellow middle-income-country, Brazil. Despite being the world's third largest producer of tobacco products, Brazil's tobacco control policies are highly advanced. Close, intelligent attention to taxation policy between 2006 and 2013 saw tax revenue rise by 48% over this period while cigarette sales declined by 32% and the number of smokers dropped by 20%. About 1 million deaths per year in China are tobacco-related, with the figure projected to increase to 3 million by 2050. The country can no longer afford to support an industry that is killing its people. At the very least it must fulfil its obligations under the FCTC and radically overhaul tobacco taxation at the earliest opportunity. For the modelling study of MPOWER implementation and smoking-related deaths averted see http://www.who.int/bulletin/volumes/91/7/12-113878/en/# For the modelling study of MPOWER implementation and smoking-related deaths averted see http://www.who.int/bulletin/volumes/91/7/12-113878/en/# The consequences of tobacco tax on household health and finances in rich and poor smokers in China: an extended cost-effectiveness analysisIncreased tobacco taxation can be a pro-poor policy instrument that brings substantial health and financial benefits to households in China. Full-Text PDF Open AccessTackling tobacco smoking in Saudi ArabiaRaising taxes on tobacco is the measure with the “least compliance”1 worldwide among the set of measures introduced by the WHO to facilitate implementation of its Framework Convention on Tobacco Control programme.1 In an extended cost-effectiveness analysis, Stéphane Verguet and colleagues (April, 2015)2 interpret that an increase in tobacco taxes can be a pro-poor policy instrument in China, where nearly a third of the world's smokers live.1 The linked Comment by Rong Zheng and Jidong Huang3 emphasises that tobacco tax increases are not necessarily regressive. Full-Text PDF Open Access