Tax and Health Promotion

1. Tax and Health Promotion Bungon Ritthiphakdee Southeast Asia Tobacco Control Alliance (SEATCA) Action on Smoking and Health (ASH) Thailand

2. Learning Objective • Learn how to advocate for tobacco tax policy based on Thailand’s experiences

3. Taxation: The Most Effective Tobacco Control Measure • World Bank report, Curbing the Epidemic (1999) • Found that higher tobacco taxes: • Induce quitting • Reduce consumption • Prevent starting • World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) Article 6 (2003): • “The parties recognize that price and tax measures are an effective and important means of reducing tobacco consumption by various segments of the population, in particular, young persons.”

4. Reluctance to Increase Tobacco Taxes • Do not know or are uncertain about the benefit of a tax increase (true or pretended) • Listen to common arguments against tax increases • Government may loose income • Smuggling may increase • Concern about political popularity • Hurt smokers, especially the poor • Influence from the tobacco industry

5. Tobacco Industries Know Taxation Is Effective “A price increase can cause a decline in the number of people who use the product or in the amount of the product its users consume. Usually it works both ways … both by increasing the number of smokers who quit and decreasing the number of young people who begin to smoke.” — Philip Morris, 1982 Source: Philip Morris Internal Documents. (1982).

6. Section A Where to Start?

7. Key Questions to Answer • What is the tobacco tax system in your country? • How is tobacco taxed? • What is the percentage of the excise tax to the retail price? • Which organization is in charge of tax decisions and collections? • What evidence is needed to move tax policy in your country? • Who are the experts in your country? • Experts can help generate local evidence and make predictions

8. Evidence: World Bank Report • A 10% price increase reduces demand by: • Four percent in high-income countries • Eight percent in low- or middle-income countries • Long-term effects may be greater • Young people and the poor are the most price responsive Source: Chaloupka et al. (2000).

9. What Is the Impact on Poor Smokers? • Poor smokers tend to spend a higher proportion of their income on tobacco • How do they react to a tax or price increase? • More likely to quit or reduce consumption, which will improve health and release income for other uses • Increased tax revenue can be used to benefit the poor Image source: Lung Health Image Library. (2007).

10. Translate World Bank Estimation to a Local Context • Potential health benefits of a 10% increase in the real price of tobacco through taxation in Thailand would: • Lead to a 10% decrease in adolescent smoking • Prevent 75,400 current youth (15- to 19-year-olds) from taking up smoking • Prevent 9,425 future deaths of today’s Thai adolescents

11. Developing Your Advocacy Plan: Key Questions • What do you want to achieve? • Who can make it happen? • What do they want to hear? • Who are your messengers? • How do you communicate your evidence? • Who are your allies?

12. Clear policy proposal What Do You Want to Propose? • Tobacco tax increase • Be specific: How much of a tobacco tax increase do you want? • Have a very clear policy proposal

13. How High Should Tobacco Taxes Be? • A comparison with international practice • Two-thirds to three-quarters of retail price • A comparison with that of countries with similar level of development • Consider how far a country may be below or above the international standard Source: Kinh et al. (2006).

14. Who Can Make It Happen? • Cabinet • National assembly or parliament • Ministry of finance • Key gatekeeper to tobacco tax policy

15. What Do They Want to Hear? • Develop a strong, country-specific message that includes: • How a tobacco tax increase is good for the country and good for them (policy maker/politician)

16. Who Are Your Messengers? • Minister of health • Tax experts or health economists, both local and international • Tobacco control champions • WHO • World Bank

17. Communicate Effectively with Policy Makers • Prepare tax increase proposal by working closely with: • Minister of health • Economists • Submit tax proposal to: • Cabinet • Health minister • Finance minister • Media

18. Key Content of Tax Proposal • Why tobacco tax policy is needed • Best practices on tax policy (FCTC/The World Bank) • Country situation • How low tobacco tax/cigarette price is in your country • Burden from tobacco use • Recommendation • How much tax should be increased? • Projection of sale and income • Answer arguments from tobacco industry and policy makers

19. Projected Effect of Tax Increase, Thailand Source: Excise Department, Ministry of Finance, Thailand.

20. Two Policy Options • Keep the tax low • Sell more cigarettes • Revenue increases slowly • Number of smokers increases, especially among youth • Increase the tax • Cigarette sales do not increase • Big increase in revenue • Number of smokers decreases, especially among youth

21. Conduct Public Opinion Poll • Amount of people supporting tax increase*: • Over 80% of nonsmokers • 65% of smokers • Overall, 70% support tax increases • Communicate effectively with policy makers • Once they know that the majority of the public supports the policy, they are more comfortable implementing the policy • Well-planned media advocacy • Identify potential media or journalist • Release of opinion poll prior to cabinet meeting *Source: Telephone poll. (1982).

22. Thai Cabinet Resolution in 1993 • Increase excise tax from 55% to 60% • Plus regular increases with inflation • Cigarette price rose from 15 to 18 baht (for a popular domestic brand)