New Study Shows Link Between Raising Alcohol Taxes and Reducing NCDs in Five Sub-Saharan Countries

Tax and noncommunicable diseases attributable to tobacco and alcohol consumption in 5 Sub-Saharan African countries

Original research article

Abstract

Background

Increased taxation on alcohol and tobacco is among the cost-effective measures used to deal with the burden of noncommunicable diseases (NCDs) globally. Despite adopting such efforts, the impacts of taxation on alcohol and tobacco are yet to be fully understood.

Objective

The study’s objective is to find empirical evidence regarding changes in the NCD mortality rate associated with changes in the tax rates of tobacco and alcohol.

Methods

The study adopted the System Generalized Method of Moments (SGMM) to explore the relationship between levels of taxes and NCD mortality rates. The SGMM allowed the inclusion of the dependent variable as an explanatory variable, assuming reverse causality was assumed.

Results

There appears to be a negative relationship between increased taxes and the rates of NCDs. Specifically, the researchers provide empirical evidence supporting the negative link between taxes on alcohol and tobacco cigarettes and the mortality rates from NCDs, which aligns with the propositions advocated by the World Health Organization (WHO).

Additionally, the interaction between alcohol taxes on spirits and beer indicates a possibility of complementarity, consistent with taxation principles.

Notably, the researchers also observed that higher tobacco cigarette prices are negatively linked with NCD mortality rates.

Conclusion

The results indicate that increasing taxes on major health risk factors is necessary to reduce non-communicable diseases (NCDs). Implementing these tax increases will likely help achieve Sustainable Development Goal 3.4, which aims to reduce NCD mortality by one-third by the year 2030.

Background

Noncommunicable diseases (NCDs) affect production by reducing labor productivity. NCDs have negative health implications and are significant contributors to reduced economic progress and productivity. NCDs result in long-term health issues as they lead to reduced quality of life, require long-term treatment and care among sufferers, introduce lifestyle changes, or, in some extreme conditions, necessitate palliative care, which also has negative implications on careers. This is a threat to economic progress as human productivity is negatively affected due to lost income that cripples the labor force of the economy.

Without effective interventions, the World Health Organization (WHO) predicts that the number of NCD-related deaths will sharply increase to 55 million by 2030.

Regarding their effect on productivity, NCDs have surpassed infectious diseases in the African Region, making up about 37% of the total disease burden. The Sub-Saharan region experiences an epidemiological change in the disease burden, with a sharp 67% increase between 1990 and 2017. Most NCDs occur due to lifestyle or environmental factors. Among lifestyle factors, long-term use of tobacco and alcohol is identified as the main risk factors.

The WHO has implemented a comprehensive Global Action Plan for the Prevention and Control of NCDs that runs from 2013 to 2030, aiming to ease the burden of NCDs. Specifically, the third objective of this plan focuses on addressing risk factors and underlying social determinants. To achieve this, the plan emphasizes the reduction of tobacco and alcohol use, as they both significantly contribute to the prevalence of NCDs. The plan aims to contribute to achieving global targets of a 30% reduction in tobacco use and a 10% reduction in population-level alcohol consumption. One of the effective measures to reduce the demand for these products is increased taxation to reduce affordability.

Global statistics indicate that more than half of the 3 million annual deaths attributable to alcohol use are from NCDs, including cancer and cardiovascular disease.

The principle of properly taxing tobacco products and alcohol is to reduce consumption, thereby lowering these risk factors that bring about NCDs. This goes way back to when classical economist Adam Smith in his book “The Wealth of all Nations”, wrote:

Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, which have become objects of almost universal consumption, and which are, therefore, extremely proper subjects of taxation.”

Adam Smit, The Wealth of Nations, 1776

Now, the nexus between NCDs and taxation is dynamic.

A recent study conducted on the “Global Burden of Cancer” reports that alcohol consumption accounts for 4% of specific cancers. Since these products are sold in a market governed by the forces of demand and supply, increasing their prices through taxation reduces their purchase. This implies that the consumption of these products will be lowered, as will the risk of developing NCDs, such as lung cancer, diabetes, hypertension, and chronic respiratory diseases. Furthermore, lowered risk will be reflected in lower NCD mortality rates.

There has been an interest in this research nexus in the past. It was found that alcohol taxation consistently reduces consumption. Alcohol prices and taxes are inversely related to alcohol use.

The present study seeks to find empirical evidence regarding changes in the NCD mortality rate associated with changes in the tax rates of tobacco and alcohol. From this primary objective, the researchers specifically sought to:

• assess the link between tobacco tax and NCDs mortality rates;
• assess the link between alcohol tax and NCDs; and lastly
• investigate the persistence of past NCDs mortality rates.

The researchers used data from five Sub-Saharan African countries to determine whether increased or high rates of pro-health taxation breathes new hope into these countries’ efforts to combat NCDs as we approach the Sustainable Development Goal (SDG) 2025 target of a 25% global reduction in NCD mortality rates.

The countries are:

• Malawi,
• Mozambique,
• South Africa,
• Zambia, and
• Zimbabwe.

Undertaking this study is important. With the current statistics on NCDs, there is a high possibility that the target to reduce NCD mortality by one-third by 2030 might not be achieved (SDG 3.4 target). Deaths related to NCDs affect SDG8 of economic growth, in particular target 8.2, because of the long-term health effects that impede productivity. This has implications for the poverty levels in the economy and SDG1 of no poverty target 5. A failure to reduce poverty will likely bring inequalities among communities as per SDG10.2.

Findings

The scientific analysis revealed a substantial negative association between alcohol tax and NCDs, demonstrating that higher alcohol taxation is associated with decreased NCDs. 

Summary statistics

The variation in NCD mortality rates across the five countries is minimal. 

Alcohol tax on beer shows a considerable variation in beer taxes. The standard deviation of alcohol tax on spirits suggests significant variation across countries. There are wide disparities in income per capita across countries.

The researchers find that increased taxes on tobacco or alcohol or both have a negative significant association with NCDs.

A positive coefficient of alcohol tax on beer implies that a one percent increase in excise tax on beer is associated with an increase in NCD mortality by 0.1152%, holding all other factors constant. This finding is intriguing and might warrant further investigation, as it could derive from other factors related to beer consumption.

A negative coefficient of alcohol tax on spirits suggests that a one percent increase in excise tax on spirits is associated with lower NCDS mortality rates by 0.0116%, all things being equal.

The joint effect of alcohol tax on beer and spirits is associated with a decrease in NCD mortality rates by 0.002%.

Source Website: Frontiers