Gap in taxes? WHO flags lack of levies on unhealthy F&B products

08 Dec 2023 --- The WHO has recently unveiled data that sheds light on a global lack of appropriate tax on unhealthy products, specifically alcohol and sugary sweetened beverages (SSBs). The findings underscore that only 108 countries worldwide implement some tax on SSBs, with the average being just 6.6%.

According to the WHO, 2.6 million deaths are attributed to alcohol consumption and over 8 million to unhealthy diets globally each year. The organization asserts that implementing taxes on alcohol and SSBs could serve as a pivotal measure to reduce these alarming figures. However, it notes that the data indicates a considerable gap in the global adoption of such taxes.

“Taxing unhealthy products creates healthier populations. It has a positive ripple effect across society — less disease and debilitation and revenue for governments to provide public services,” says Dr. Rűdiger Krech, director of health promotion at the WHO. “In the case of alcohol, taxes also help prevent violence and road traffic injuries.”.

Annually, 2.6 million deaths are attributed to alcohol consumption and over 8 million to unhealthy diets globally, the WHO says.Effects of current taxation patterns
Among the 108 countries taxing SSBs, half are also taxing water, a practice explicitly discouraged by the WHO. Additionally, while 148 countries apply excise taxes to alcoholic beverages, at least 22 countries, predominantly in Europe, have exemptions for wine.

The average excise taxes constitute 17.2% of the price of the most sold beer brand globally and 26.5% for the most sold spirits type.

Krech emphasizes the positive impact of taxing unhealthy products, citing reduced alcohol-related deaths in countries such as Lithuania that increased alcohol taxes. The nation experienced a significant increase in alcohol tax revenue, from 234 million euros in 2016 to 323 million euros in 2018, coinciding with a decrease in alcohol-related deaths from 23.4 to 18.1 per 100,000 people.

A 2017 study posits that a 50% increase in alcohol prices could potentially avert over 21 million deaths over 50 years and generate nearly US$17 trillion in additional revenues — a figure equivalent to the total government revenue of eight major economies in one year.

Further supporting the case for increased taxes is a recent Gallup Poll conducted in collaboration with WHO and Bloomberg Philanthropies. The results indicate widespread public support for higher taxes on unhealthy products globally. WHO recommends the universal application of excise taxes to all SSBs and alcoholic beverages to match the prevailing public sentiment.

The WHO’s tax recommendations
The organization has recently also released an alcohol tax manual placing an emphasis on evidence-based fiscal policies aimed at addressing pressing public health challenges. 

The manual asserts that alcohol tax policies are crucial not just for revenue generation but as effective interventions to address the individual, social and economic consequences of alcohol consumption, which is linked to over 200 diseases and injuries globally.

The evidence presented underscores that excise tax increases resulting in price hikes are among the most effective and cost-efficient mechanisms to reduce alcohol consumption.

It is stressed that alcohol tax and pricing policies work best when integrated into a comprehensive alcohol control strategy, which may include measures like restricting availability, enforcing advertising bans and facilitating access to interventions and treatment.

Furthermore, the economic burden of alcohol consumption is substantial, with costs estimated to be a significant percentage of some countries’ gross domestic product. Tax and pricing policies are positioned as tools to target the affordability of alcohol.

Studies suggest that a 50% increase in alcohol prices could potentially avert over 21 million deaths over 50 years and generate additional revenue.Proposed industry actions
The manual provides insights into designing effective tax structures, considering factors like ad valorem versus specific excise taxes, tiered rates based on alcohol strength and the importance of regular adjustments to keep up with inflation and income growth.

It also highlights the importance of efficient tax administration systems that address the complexity of taxing diverse alcoholic beverages and combat illicit trade. The manual also acknowledges the need for industry engagement, discusses subsidies and industry arguments against tax increases and emphasizes the need for policy-makers to navigate the political environment.

The manual is part of a series on health taxes, aligning with WHO’s broader efforts on excise taxes for non-communicable diseases, including tobacco and sugar-sweetened beverages.

Researchers in Germany recently calculated the economic and public health burden of the lack of appropriate tax on SSBs, highlighting that the nation is lagging behind countries like the UK and Mexico in this regard.

The UK’s tiered tax on SSBs resulted in a 10% drop in consumption, prevented 5,000 cases of obesity in young girls and improved dental health among British children.

By Milana Nikolova