Health taxes can improve people’s health and protect the planet, say experts | Imperial News

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The importance of health taxes in addressing obesity and climate change was one of the outcomes of an event hosted at the Business School

Henry Dimbleby, who co-founded the Leon restaurant chain and has produced two Government-commissioned independent reports that call for urgent changes to British food production, said the impact on the environment of the growth in agriculture is hard to exaggerate, from biodiversity loss to freshwater pollution, deforestation and global warming. “The food system creates about 20 to 30% of all greenhouse gas emissions. If we are going to restore the environment, we need to look at the food system.”

The event marked the launch of a new book Health Taxes: Policy and Practice, authored by Imperial College Business School’s Centre for Health Economics and Policy Innovation and the World Health Organization (WHO) — which builds an argument for why policymakers should care about health taxes as a measure to address the rise in non-communicable diseases as a result of unhealthy diets, smoking and alcohol consumption.

Jeremy Lauer, Professor of Management Science at Strathclyde Business School and one of the editors of the book, said that health taxes could play a critical role in expanding universal health coverage and achieving broader United Nations Sustainable Development Goals (SDGs). He said: “The magic bullets of the last century may have been antibiotics, the ones of the coming century are fiscal measures and other forms of human empowerment.”

“The health of society is one of our greatest assets, so we should treat any introduction of taxes as a long-term investment to boost people’s health and protect our planet.”  Henry Dimbleby Co-Founder of Leon Restaurants

The book’s release follows the release of the recent launch of the UK Government’s Food Strategy white paper. Mr Dimbleby told the audience that the tax was “very difficult politically” given that the Government wanted to avoid hitting households with higher prices during the cost of living crisis driven by soaring inflation.

Highlighting the positive value of taxes as a measure to create a healthier, thriving society, Mr Dimbleby said: “The health of society is one of our greatest assets, so we should treat any introduction of taxes as a long-term investment to boost people’s health and protect our planet.” 

Improving health outcomes

Ruediger Krech, Director of the Department of Health Promotion at the WHO, said in a recorded address, that health taxes can play a vital role in achieving the twin goals of improving health outcomes and strengthening the public sector. “Each year, 41 million people die from preventable non-communicable diseases, such as cardiovascular diseases, cancers, chronic respiratory diseases and diabetes. These deaths could be avoided by eliminating tobacco use and alcohol misuse and by improving unhealthy diets. One of the most cost effective ways of achieving this is through the intelligent use of health taxes [that] reduce the consumption of unhealthy products [and] disincentivize unhealthy behaviours.”

Health taxes can also serve as a revenue booster for governments, as policymakers face the challenges of financing the Sustainable Development Goals and achieving better funding for health and social care, as well as shoring up the public finances after excessive public borrowing through the Covid-19 pandemic.

Celine Colin, an economist at the Organisation for Economic Co-operation and Development’s (OECD) Center for Tax Policy and Administration, said that health taxes represent, on average, 2.5% of total tax revenues in high income countries and about 4% in middle-income nations, though in other countries the tax take is substantially higher. “In some cases, health taxes account for an important share of tax expenditures and therefore there is potential for those revenues to finance healthcare systems,” said Ms Colin.

She added that the pandemic has created an opportunity for health-friendly tax reform. “We know countries are in a difficult position when it comes to public finances during the crisis. And many of them have to implement tax policy measures and sometimes even tax reforms. There is clearly a political momentum today that governments should not miss.”

Policymakers are still hesitant because taxes applied on tobacco, alcohol and sugar sweetened beverages are generally passed to consumers in the form of higher prices, said Annalisa Belloni, a Health Economist at WHO. This means that sometimes people with low incomes bear a larger tax burden, but generally they also benefit the most from health taxes. “There is evidence that the lower the income of consumers, the more they are sensitive to price changes,” said Ms Belloni.

The issue of health taxes being a threat to jobs was another topic discussed at the event.  Sarah Mounsey, Post-doctoral Research Associate in Economics at Imperial College Business School said these claims tend to be overstated. “Taxed industries are likely to see some employment reductions, but the important thing to note is that it’s probably short-term in effect,” she said. “Because what happens is when consumers stop spending on the tax goods, they tend to spend on other goods and services and thereby creating increased employment requirements in those sectors.”

Professor Franco Sassi, Director of the Centre for Health Economics and Policy Innovation at Imperial College Business School said: “Consumption taxes account for over one third of all tax revenues worldwide (over one fourth in the UK), but only a very small proportion of these taxes are designed to incentivise healthy and sustainable consumption.  Governments do not always need to levy new taxes and there is a vast potential for a new use of existing consumption taxes in ways that will contribute to addressing major global problems. Consumers will not see their tax burden increase at a time when inflation is eroding purchasing power, and at the same time they will have more opportunities to purchase products that are better for their own, and for the planet’s, health.”

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