Tobacco Tax Produces New Revenues for Health

When newly appointed Philippines health minister, Dr. Enrique Ona, came to Harvard for the 2012 Ministerial Health Leaders Forum he was wrestling with a nascent idea about earmarking revenues from tobacco taxes for health. A year later he was successful in convincing the national legislature to increase tobacco taxes by approximately 75% and to designate that revenue for health purposes—specifically to ensure increased access and improved quality of front line health services in remote parts of the Philippines. For more information see this recent case study on the Philippines tobacco control legislation.

Dr. Ona says his experience at Harvard helped him develop a clear strategy to persuade lawmakers and other stakeholders of the merits of his proposal, and to do battle with the considerable vested interests opposed to the minister’s idea.

Tobacco taxation is a point of focus during the Harvard Ministerial Forum as part of a broader examination of increasing health budget effectiveness. Opportunities for reprioritizing existing health budget allocations, savings from increased service delivery efficiencies and potential new revenues are examined in detail. Global tobacco regulation expert, Dr. Frank Chaloupka, in his presentation (see Dr. Chaloupka’s presentation here) to the Forum sets out the social and economic impact of the health consequences of tobacco use (including illness, lost productivity and mortality) across lower income countries, as well as the financial burden on national health services. In the U.S. for example tobacco related illness accounts for about 9% of health care expenditure and approximately $151 billion in lost productivity annually. In lower income countries these impacts result in even more saver burden on social and economic mobility and already under-resourced health services. There is compelling evidence, Chaloupka argues, of the health benefits of reduced tobacco consumption resulting from increased taxation and other tobacco use restrictions.

Tobacco Taxation Graphic
Source: Bloomberg Initiative White Papers on Tobacco Taxation, 2008-2013

While at Harvard health and finance ministers participating in the MLIH Program develop tobacco regulation approaches appropriate to their countries with a clear focus on increasing health budget revenues and cutting tobacco-related health care costs.