Global Health Tax Initiative: A $1 Trillion Push to Tackle Tobacco, Alcohol, and Sugary Drink Consumption

Relevance: GS II Health

A new worldwide initiative has been started to drastically raise taxes on alcohol, tobacco, and sugary drinks by at least 50% over the next ten years. This is a significant public health measure. Supported by governments, civil society, and international organizations, this policy seeks to raise more than $1 trillion in public funds in addition to reducing the use of dangerous products. Since over 75% of deaths worldwide are caused by non-communicable diseases (NCDs), this coordinated tax strategy provides a potent tool for both economic sustainability and health improvement.

What is a Health Tax?

Imposed on goods like alcohol and tobacco that have a detrimental effect on public health. One of the most economical strategies for combating obesity and other associated non-communicable diseases (NCDs) is taxes, according to the WHO.

Why Health Taxes Are Needed

Both negative externalities (costs to others) and internalities (hidden costs to consumers) are produced by these products.

• In 2012, tobacco usage alone cost the world economy US$1.4 trillion.

Within five years, a 50% tax can raise up to US$ 3.7 trillion in new income worldwide, or an average of US$ 740 billion year, or 0.75% of global GDP. People with lower incomes are disproportionately affected by NCDs.

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India’s Efforts to Curb Unhealthy Consumption

In India, 12% compensation cess and 28% GST are applied to aerated beverages.

• In India, items containing high-fat sugar salt (HFSS) are subject to a 12% GST rate.
• Trans fatty acids (TFA) in food products are restricted by the FSSAI to 2% of the mass of all oils and fats.

Global Case Studies on Health Tax Success

• Colombia (2016): A 34% decrease in cigarette usage is caused by an increase in cigarette taxes in Colombia.
• Saudi Arabia: Within a year, a 50% tax on sugar-sweetened beverages (SSBs) led to a 19% drop in SSB consumption.

Mains:

Question: “Health taxes can act as both a fiscal tool and a preventive public health measure.” Examine the rationale behind imposing health taxes and evaluate their effectiveness in addressing the growing burden of non-communicable diseases (NCDs).

MCQs

Question: Consider the following statements regarding Health Taxes:

1. Health taxes are levied only to raise government revenues and have no direct relation to public health.
2. The WHO recommends health taxes as one of the most cost-effective tools for combating non-communicable diseases (NCDs).
3. Health taxes can help internalize the hidden and social costs of consuming harmful products like tobacco and alcohol.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer: (b)

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MCQs PYQs

Question: CoBrominated flame retardants are used in many household products like mattresses and upholstery. Why is there some concern about their use? (UPSC IAS 2014)

1. They are highly resistant to degradation in the environment.
2. They are able to accumulate in humans and animals.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer: (c)

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