The Place for Health Taxes in the Wider Fiscal System

Céline Colin, Gioia de Melo and Bert Brys

Chapter 2 in Health Taxes:Policy and Practice, 2023, pp 23-55 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Health taxes on tobacco and alcohol have a long history and on average raise significant amounts of revenues across countries. Moreover, interest in – and adoption of – taxes on sugar-sweetened beverages has increased in recent years as evidence of the negative health effects of unhealthy diets has become more prevalent. Overall, there is a trend towards a wider use of health taxes as part of countries’ health protection and promotion policies. On average, Health tax revenues account for 0.8% of GDP in high and middle-income countries and 0.4% of GDP in low-income countries. Scope exists to enhance the role of health taxes, but health tax reform needs to be embedded within the design and functioning of the broader tax system. Together with environmental taxes that aim at reducing practices which cause damage to the environment and people’s health, health taxes could play a role helping restore public finances once economies are on a more solid path to recovery from the COVID-19 crisis. In addition to increasing health tax rates, there might be substantial revenue potential from extending health taxes to other products that generate negative externalities linked to health. We begin by describing how health taxes are generally levied and we then consider their revenue-raising capacity. We consider general tax policy design principles and discuss how health taxes may interact with these principles.

Keywords: Health Tax; Health Taxes; Tobacco Tax; Alcohol Tax; Sugary Drinks Tax; SSB Tax; Sugar-Sweetened Beverages Tax; Fiscal Policy; Health; Non-communicable Diseases; NCDs; Health Financing; Public Finance; Public Health (search for similar items in EconPapers)
JEL-codes: I1 I15 K32 (search for similar items in EconPapers)
Date: 2023
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