Does Taxation on Harmful Products Influence Population Health? Evidence From Africa Using the Dynamic Panel System GMM Approach
Products such as tobacco and alcohol are known to be deleterious to human health. Tobacco use for instance, causes over eight million deaths annually worldwide. This has necessitated the imposition of taxes on such harmful products aimed at reducing their demand and hence ensure enhanced population health. However, while the effects of such taxes on deaths related to the consumption of these products have been given much attention, very little attention has been given to how these taxes enhance overall population health beyond these related deaths. products.
Using tobacco tax as a proxy for taxation on harmful products and life expectancy as a proxy for overall population health, this study, examines the effect of taxing harmful products on population health in 38 African countries from 2008–2018. The system Generalized Methods of Moments (GMM) regression is employed as the empirical estimation technique.
The findings of the study show that, taxing harmful products enhances population health both in the short-run and long-run periods.
The implication is that, governments, especially those in Africa, can use taxation on harmful products to improve population health even beyond deaths related to the consumption of these products.