Noncommunicable diseases (NCDs) kill over 43 million people worldwide every year, and cause huge economic burden and healthcare costs. Major NCDs include cancers, cardiovascular diseases, chronic respiratory diseases and diabetes. Smoking and secondhand smoke exposure, unhealthy diets, harmful drinking and physical inactivity are the four main risk factors of NCDs.
Health taxes, taxing tobacco products, alcoholic drinks and sugar-sweetened beverages, are a proven means to reduce consumption of the harmful products and save lives. Revenue generated from health taxes can be deployed to public health and other social priorities. Vital Strategies, a global public health organization, has published an action guide to advise governments to implement health taxes. The action guide lays out the key elements of health tax design, including:
1. Simple tax structure: Specific excise tax should be adopted among other tax structures (ad valorem tax, combination of specific excise tax and ad valorem tax, tiered tax and indexed tax) for its strongest resistance to industry manipulation and best predictability;
2. Broad tax base: All products in the category should be covered without exemptions to avoid substitution, which will undermine the effectiveness of taxation;
3. High tax level with automatic adjustments: The tax should start at a high level with automatic adjustments for inflation and income growth, such that the affordability of products will not increase over time;
4. Earmarking tax revenues to deliver tangible social benefits: Deploying revenues from health taxes to purposes such as health, education and social programmes may increase public and political support for taxation by building trust and demonstrating immediate benefits; and
5. Clear legal definitions of products and strong enforcement: Products to be taxed should be clearly defined to avoid reclassification tactics of industry. Track-and-trace systems, licensing and smuggling controls should be adopted.
The action guide also reminds that industry tactics to interfere or undermine health taxes should be anticipated, such as undermining the science that favours questionable facts, deploying front groups to spread messages for the industry, claiming employment losses, etc. Governments are advised to fight against industry tactics with independent evidence, transparency and clear legal text.
Despite the tobacco tax increases in 2023 and 2024, the tax level in Hong Kong (63% of cigarette retail price) remains below the level recommended by the WHO (75%). COSH urges the Government to raise the tobacco tax to at least 75% of tobacco retail price and to regularly adjust the tax level to reduce the affordability of tobacco, mobilizing more smokers to quit.
Source: Vital Strategies