Health Taxes and the IMF: What 15 Years of Policy Advice Reveal

Sanjeev Gupta and Ainhoa Petri-Hidalgo
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Sanjeev Gupta: Center for Global Development
Ainhoa Petri-Hidalgo: Center for Global Development

No 733, Working Papers from Center for Global Development

Abstract: Noncommunicable diseases (NCDs) impose immense health and economic costs worldwide, with a disproportionate burden on low- and middle-income countries. Excise taxes on tobacco, alcohol, and sugar-sweetened beverages (SSBs) are recognized as an effective policy instrument that both curbs consumption and mobilizes public revenue. Yet, actual collections fall far below potential. This paper reviews 15 years of International Monetary Fund (IMF) policy advice on health taxes (2010–2024) across bilateral surveillance, lending programs, technical assistance, and multilateral surveillance. While health policy is not part of the IMF’s direct mandate, the institution influences it indirectly through its work on the tax mix and domestic resource mobilization. Based on over 5,400 IMF documents, the analysis finds that health taxes have not been a central focus of IMF engagement—and are typically framed in fiscal, rather than health, terms. References to health taxes peaked between 2017 and 2019, particularly in program-linked conditionality, whereas technical assistance remained episodic, reflecting its demand-driven nature. IMF advice did not vary across income groups or regions, despite wide disparities in fiscal capacity and health burdens, nor was it aligned with countries’ untapped revenue potential or actual excise performance. This suggests an opportunity for the IMF to place greater emphasis on health taxes in countries with low revenue-to-GDP ratios, where they could advance domestic resource mobilization while delivering a “double dividend” of better health outcomes and higher revenues.

Pages: 30 pages
Date: 2025-10-27
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