Publication: Tobacco Tax Reform at the Crossroads of Health and Development: A Multisectoral Perspective
Loading...
Date
2017
ISSN
Published
2017
Author(s)
Editor(s)
Abstract
There is a policy measure that can simultaneously save millions of lives, reduce poverty, and increase countries’ domestic resources for financing development. The policy measure consists of increasing excise tax rates on tobacco in order to reduce its affordability and, as evidence shows, lower its consumption. Today, this powerful human development and poverty reduction measure remains largely underutilized, especially in low- and middle-income countries (LMICs). This report provides decision support for policy makers on tobacco tax reform, as well as analytical and empirical tools for using tobacco excise taxes to save lives and increase government revenues. The report sets forth the public health, economic, and anti-poverty case for higher tobacco taxes; shows how some countries have already delivered ambitious reforms; and documents measurable results. It shows that, by implementing tobacco tax reforms now, policy makers can choose a fast road to healthier, more prosperous societies.
Link to Data Set
Citation
“Marquez, Patricio V.; Moreno-Dodson, Blanca. 2017. Tobacco Tax Reform at the Crossroads of Health and Development: A Multisectoral Perspective. © World Bank. http://hdl.handle.net/10986/28494 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication How Can Public Spending Help You Grow? An Empirical Analysis for Developing Countries(2010-07-01)Although many studies indicate that both the level and composition of public spending are significant for economic growth, the results in the empirical literature are still mixed. This paper studies the importance of country sample selection and expenditure classification in explaining these conflicting results. It investigates a set of fast-growing countries versus a mix of countries with different growth patterns. The regression specifications include different components of public expenditure and total fiscal revenues, always considering the overall government budget constraint. Total public spending is first disaggregated using a definition that classifies public spending as productive versus unproductive components, an a priori criterion that is based on the expected impact of public spending items on the private sector production function. After empirically confirming the validity of this definition in the panel analysis, the authors suggest and test an alternative definition of "core" public spending that may be more appropriate for developing countries. The empirical analysis shows that the link between growth and public spending, especially the productive and "core" components, is strong only for the fast-growing group. In addition, macroeconomic stability, openness, and private sector investment are significant in the fast-growing group, which points to the existence of an economic policy environment more conducive to growth in the first group of countries. The authors conclude that public spending can be a significant determinant of growth for countries that are capable of using funds for productive purposes.Publication Is Fiscal Policy the Answer? A Developing Country Perspective(Washington, DC: World Bank, 2013)Fiscal policy is an important instrument for maintaining and improving living standards. Such living standards can be viewed as an outcome of the interaction between the opportunities offered by society and the readiness and ability of each person to exploit them. Under certain circumstances, public finance can make an important contribution to the creation of opportunities within a given society by raising resources from the private sector through taxation or borrowing (domestic and external) and allocating those resources effectively and equitably in the form of public spending, including through public goods and transfers. The first chapters in this volume sketch out a framework that policy makers can use in adopting a more cohesive or integrated approach to the short- and long-term dimensions of fiscal policy. Here the traditional threefold rationale for fiscal policy proposed by Musgrave-stabilization, resource allocation, and distribution-continues to be useful. Other chapters in this volume take up some of the critical institutional challenges in implementing fiscal policy for longer-term growth and development. These chapters also look at the tools and approaches being developed to address these challenges. Improving the quality of public investment management is a particular priority in view of the recent evidence that as little as half of all public investment expenditure translates into productive capital stock. The last chapter in this volume is a case study of fiscal responses to the great recession in low-income Sub-Saharan Africa, looking at stabilization and the longer-run growth, as well as distributional aspects of such responses. The growing depth of domestic financial markets in many African countries rather unexpectedly is turning out to be a critical source of financing for fiscal policy responses.Publication Agriculture Public Spending and Growth in Indonesia(2012-02-01)This paper analyzes the trends and evolution of public spending in the agriculture sector in Indonesia, as well as the impact of public spending on agricultural growth. It finds that, in line with empirical work undertaken in other countries, public spending on agriculture and irrigation during the period 1976-2006 had a positive impact on agricultural growth, while public spending on fertilizer subsidies had the opposite effect. The composition of spending patterns in Indonesia over the past decade can partly explain why significant increases in public spending for agriculture have not resulted in a commensurate increase of agricultural production. The paper is structured as follows. Section I presents analytical and empirical findings about the impact of overall public spending on growth, with a particular focus on Indonesia, followed by an analysis of the government's role in agriculture. More precisely, it discusses how public spending can contribute to higher productivity and faster growth in the sector. The section draws lessons from the empirical literature and country examples worldwide, exploring the implications of some of these findings in the Indonesia context. Section II presents the results of an empirical analysis of the impact of agriculture public spending on agriculture gross domestic product per capita growth in Indonesia, using time series analysis with both ordinary least squares and generalized method of moments econometric techniques. Section III analyzes in detail agriculture public spending trends in Indonesia over the period 2000-08, highlighting that a large and increasing share of the spending is being allocated to subsidies (fertilizer, credit, seeds) and to fund transfers to farmers and farmers' groups.Publication On the Marriage Between Public Spending and Growth : What Else Do We Know?(World Bank, Washington, DC, 2009-03)While there are strong theoretical arguments for ways in which public spending influences growth, robust empirical links have been difficult to establish. More recently, many of the methodological problems that plagued the earlier literature have been overcome and interesting policy lessons drawn. The number of studies of developing countries using these new approaches is still limited, due to data scarcity and other comparability issues, but overall findings from the new literature are relevant for developing country policy makers and also open new venues for future research. The objective of this note is to present these new empirical results together with the methodological improvements that support them, and to outline some of the issues that need deeper analysis and empirical study, particularly in developing countries.Publication Is Tobacco Taxation Regressive? Evidence on Public Health, Domestic Resource Mobilization, and Equity Improvements(World Bank, Washington, DC, 2019-04-01)Tobacco taxes are recognized as an effective policy tool to reduce tobacco consumption and improve health outcomes; however, policy makers often hesitate to use them because of their possible regressive effects. This report assesses the ability of taxes on tobacco to improve future health and welfare outcomes, with a focus on their distributional impact and effects on the poor. In addition to adverse consequences on health and quality of life of smokers and their family members, tobacco-related illnesses cost billions of dollars in medical expenditures and losses in human capital and productivity, imposing heavy economic tolls on households and governments. Developing countries bear a high and increasing share of the economic burden of tobacco. However, traditional analyses often overlook the many economic benefits of reducing tobacco consumption. This report presents empirical findings using an extended cost benefit analysis (ECBA) methodology, to incorporate a more comprehensive view of the costs and benefits of increasing prices of tobacco on household welfare, and to assess their distributional impact by accounting for different consumer behaviors across income groups. Evidence for several countries shows that large price shocks on cigarettes can generate progressive and welfare-improving medium and long-term net impacts, that particularly improve welfare of lower-income households. Large shares of societies—and particularly the poor—can benefit from positive income gains by reducing tobacco-related medical expenses and avoiding premature deaths. Moreover, additional fiscal revenues generated may be used to further enhance measures to control tobacco and promote equity. Ultimately, the benefits and distributional impact of raising taxes on tobacco will depend on the ability of policy to understand and to leverage consumers' responses toward quitting tobacco, and to target comprehensive interventions to help the most vulnerable groups.
Users also downloaded
Showing related downloaded files
Publication Empowerment in Practice : From Analysis to Implementation(Washington, DC: World Bank, 2006)This book represents an effort to present an easily accessible framework to readers, especially those for whom empowerment remains a puzzling development concern, conceptually and in application. The book is divided into two parts. Part 1 explains how the empowerment framework can be used for understanding, measuring, monitoring, and operationalizing empowerment policy and practice. Part 2 presents summaries of each of the five country studies, using them to discuss how the empowerment framework can be applied in very different country and sector contexts and what lessons can be learned from these test cases. While this book can offer only a limited empirical basis for the positive association between empowerment and development outcomes, it does add to the body of work supporting the existence of such a relationship. Perhaps more importantly, it also provides a framework for future research to test the association and to prioritize practical interventions seeking to empower individuals and groups.Publication Poverty and Shared Prosperity 2022(Washington, DC : World Bank, 2022)Poverty and Shared Prosperity 2022: Correcting Course provides the first comprehensive analysis of the pandemic’s toll on poverty in developing countries. It identifies how governments can optimize fiscal policy to help correct course. Fiscal policies offset the impact of COVID-19 on poverty in many high-income countries, but those policies offset barely one quarter of the pandemic’s impact in low-income countries and lower-middle-income countries. Improving support to households as crises continue will require reorienting protective spending away from generally regressive and inefficient subsidies and toward a direct transfer support system—a first key priority. Reorienting fiscal spending toward supporting growth is a second key priority identified by the report. Some of the highest-value public spending often pays out decades later. Amid crises, it is difficult to protect such investments, but it is essential to do so. Finally, it is not enough just to spend wisely - when additional revenue does need to be mobilized, it must be done in a way that minimizes reductions in poor people’s incomes. The report highlights how exploring underused forms of progressive taxation and increasing the efficiency of tax collection can help in this regard. Poverty and Shared Prosperity is a biennial series that reports on global trends in poverty and shared prosperity. Each report also explores a central challenge to poverty reduction and boosting shared prosperity, assessing what works well and what does not in different settings. By bringing together the latest evidence, this corporate flagship report provides a foundation for informed advocacy around ending extreme poverty and improving the lives of the poorest in every country in the world. For more information, please visit worldbank.org/poverty-and-shared-prosperity.Publication World Development Report 2004(World Bank, 2003)Too often, services fail poor people in access, in quality, and in affordability. But the fact that there are striking examples where basic services such as water, sanitation, health, education, and electricity do work for poor people means that governments and citizens can do a better job of providing them. Learning from success and understanding the sources of failure, this year’s World Development Report, argues that services can be improved by putting poor people at the center of service provision. How? By enabling the poor to monitor and discipline service providers, by amplifying their voice in policymaking, and by strengthening the incentives for providers to serve the poor. Freedom from illness and freedom from illiteracy are two of the most important ways poor people can escape from poverty. To achieve these goals, economic growth and financial resources are of course necessary, but they are not enough. The World Development Report provides a practical framework for making the services that contribute to human development work for poor people. With this framework, citizens, governments, and donors can take action and accelerate progress toward the common objective of poverty reduction, as specified in the Millennium Development Goals.Publication Boom, Bust and Up Again? Evolution, Drivers and Impact of Commodity Prices: Implications for Indonesia(World Bank, Jakarta, 2010-12)Indonesia is one of the largest commodity exporters in the world, and given its mineral potential and expected commodity price trends, it could and should expand its leading position. Commodities accounted for one fourth of Indonesia's Gross Domestic Product (GDP) and more than one fifth of total government revenue in 2007. The potential for further commodity growth is considerable. Indonesia is the largest producer of palm oil in the world (export earnings totaled almost US$9 billion in 2007 and employment 3.8 million full-time jobs) and the sector has good growth prospects. It is also one of the countries with the largest mining potential in view of its second-largest copper reserves and third-largest coal and nickel reserves in the world. This report consists of seven chapters. The first six chapters present an examination and an analysis of the factors driving increased commodity prices, price forecasts, economic impact of commodity price increases, effective price stabilization policies, and insights from Indonesia's past growth experience. The final chapter draws on the findings of the previous chapters and suggests a development strategy for Indonesia in the context of high commodity prices. This section summarizes the contents of the chapters and their main findings.Publication Impact Evaluation in Practice, First Edition(World Bank, 2011)The Impact Evaluation in Practice handbook is a comprehensive and accessible introduction to impact evaluation for policymakers and development practitioners. The book incorporates real-world examples to present practical guidelines for designing and implementing evaluations. Readers will gain an understanding of the uses of impact evaluation and the best ways to use evaluations to design policies and programs that are based on evidence of what works most effectively. The handbook is divided into three sections: Part One discusses what to evaluate and why; Part Two outlines the theoretical underpinnings of impact evaluation; and Part Three examines how to implement an evaluation. Case studies illustrate different methods for carrying out impact evaluations.