Global Tax Program

Blog

Smart health taxes: A win for public health and the economy

Taxes on tobacco, alcohol and sugary drinks can contribute to a reduction in diseases like cancer and diabetes while boosting government revenue. When well designed and implemented, health taxes can generate significant economic benefits. Discover how these smart policies can make a difference in our latest blog.

Publication

GTP Health Taxes Knowledge Note Series

The Global Tax Program Health Taxes Knowledge Note Series, produced by the Global Tax Program’s Health Tax Workstream, focuses on topics linked to implementation of health taxes, or excise taxes on tobacco, alcoholic drinks and sugar-sweetened beverages.

Download the knowledge notes here

event

Conference Health Tax Reforms — Challenges and Lessons Learned

A two-day conference on Health Tax Reforms – Challenges and Lessons Learned was held on June 24-25, 2024, in Vienna, Austria. The conference was jointly organized by the World Bank and the Vienna Institute for International Economic Studies, with support from Bloomberg Philanthropies.

Global Tax Program Health Taxes Knowledge Notes Launch Webinar

Event

Launch Webinar: Global Tax Program Health Taxes Knowledge Note Series

The GTP Health Taxes Knowledge Note Series was launched with a webinar on March 22, 2023. Speakers discussed the first notes in the series, "Why Health Taxes Matter" and "Health Taxes and Inflation."

Health taxes for healthier populations: Cost-effective policy to save lives

In this blog, four Global Directors of the World Bank Group explain how The Global Tax Program’s Health Tax Workstream brings together knowledge & expertise from across the bank.

Read the blog here

Health taxes are excise taxes applied to products that generate health related negative externalities and internalities, including tobacco, alcohol, and sugar-sweetened beverages (SSBs). Excise taxes are the most effective policy instrument to increase market prices to account for the full cost of consumption since they can be used to target specific goods and services. In doing so they differ from other types of indirect taxes such as value-added tax (VAT) or goods and services tax (GST) that are broad based, tools such as import duties that only target imported goods.
The economic framework for health taxes on tobacco, alcohol, and SSBs has three goals: to reduce negative externalities related to consumption, e.g., publicly funded healthcare costs related to non-communicable diseases, secondhand smoke and alcohol-related traffic accidents, violence and gender-based violence; to cut negative “internalities” related to individual harm, including addiction and youth initiation; and to generate tax revenue to meet fiscal needs.
To this end, health taxes are also one of the most cost-effective policy measures for reducing the consumption of these products and associated mortality and morbidity, and can also generate meaningful tax revenues. Global Tax Program (GTP) research shows that health taxes raise .6 to .3% of GDP from tobacco and alcohol taxes, respectively.
The Health Taxes project builds on decades of World Bank experience to support countries in assessing, reforming, and developing their health tax agenda. Situated under the Global Tax Program (GTP), the project ensures that health taxes are considered within countries' broader fiscal policy, domestic resource mobilization, and tax reform programs, and excise tax policy and effective administration as instruments to strengthen sustainable economic growth and shared prosperity.
Focal Areas of Support
Improving health taxes requires engaging across the following focal areas of support, which are often applied in tandem. Countries can request support on health taxes from the GTP health taxes global team directly, or via other teams from across the Bank who channel these requests. Regardless of where the request originates, work is always undertaken in close collaboration with our Bank country colleagues and relevant global teams, and as a complement to activities implemented by partners.
The following table depicts focal areas of support provided by the Health Taxes Project:
The Health Tax project provides Bank-executed resources across all three areas of health taxes (tobacco, alcohol and SSBs) and is active in every region where the World Bank operates. In the majority of the 40+ countries where the project has engaged or is exploring support, work focuses on tobacco as well as at least one other health tax area.

By situating our work within the GTP, the project ensures that health taxes are considered within countries' broader tax reform programs and excise tax policy and administration. For instance, in Cambodia, Ethiopia and Ghana, the Health Tax project work is integrated into broader tax system diagnostics and reform support and a part of efforts to modernize the excise tax regime within these countries. In Kosovo, Lao People’s Democratic Republic and North Macedonia, health tax analyses have contributed to core World Bank country diagnostics such as Public Finance Reviews, which are the main vehicles for the Bank to hold dialogue on fiscal policy.
The World Bank focuses on responding to demand in low- and middle-income countries who have expressed interest in support: With staff in over 130 countries, we have direct relationships with government counterparts whom we work with on a daily basis and who channel requests for support, including priorities for learning from other countries.
The Global Tax Program’s Health Tax project also collaborates with global teams from across the Bank including Poverty, Governance, Macroeconomics Trade and Investment (MTI), and Health, Nutrition and Population to provide support to countries considering reform, and in collaboration with other organizations including the IMF, WHO, PAHO, OECD, and other academic and civil society partners.
The Health Taxes Knowledge Note Series, produced by the Global Tax Program’s workstream on Health Taxes, focuses on crucial considerations to achieve well-designed and effective implementation of excise taxes on tobacco, alcoholic drinks and sugar-sweetened beverages. The purpose of this series is to provide policy makers with an overview of relevant issues and feasible policy choices in setting health taxes based on questions that emerge from the field during health tax reforms.
📑 Knowledge Note #1: Why Health Taxes Matter: A Mechanism to Improve Health and Revenue Outcomes
This first knowledge note in the series, “Why Health Taxes Matter: A Mechanism to Improve Health and Revenue Outcomes” presents an economic framework exploring how health taxes can be used as a mechanism to generate both health and fiscal outcomes. The note also discusses the link between health taxes and tax policy and administration, and actions that countries can take to improve health and revenue outcomes.
📑 Knowledge Note #2: Health Taxes and Inflation
The second knowledge note in the series, “Health Taxes and Inflation” explores the interaction between inflation and health taxes and presents a set of good practice policy considerations related to indexation of specific taxes in order to retain revenue potential.
📑 Knowledge Note #3: Tobacco Excise Taxes and Tobacco Leaf Farming— Key Considerations
The third knowledge note in the series, "Tobacco Excise Taxes and Tobacco Leaf Farming— Key Considerations" looks at the interaction between tobacco farming and excise taxation across a set of countries that grow tobacco leaf, providing policy makers with an overview of how tobacco excises do or do not impact factors in countries that farm tobacco such as growth, employment and domestic demand.
📑 Knowledge Note #4: Unpacking the Empirics Behind Health Tax Revenue
The fourth knowledge note in the series, "Unpacking the Empirics Behind Health Tax Revenue" gives policy makers an overview of the revenue potential for health taxes, including from policy changes related to adjusting existing tax structures and rates.
📑 Knowledge Note #5: Sugar-Sweetened Beverage Taxes: Rationale, Evidence and Design for Improving Health
The fifth knowledge note in the series, "Sugar-Sweetened Beverage Taxes: Rationale, Evidence and Design for Improving Health" provides an overview of the rationale for implementing sugar-sweetened beverage (SSB) taxes, their impacts, and relevant design and tax administration considerations.
📑 Q&A on Nutrition-Related Excise Taxes
This Q&A provides detailed responses to commonly asked questions about what and how to tax when it comes to nutrition- related targets of excise taxes, including sugar-sweetened beverages, ultra-processed foods, and implications for taxing inputs such as raw sugar or salt. It is a companion to Knowledge Note #5 on Sugar-Sweetened Beverage Taxes: Rationale, Evidence and Design for Improving Health.
The Global Tax Program Health Taxes team also produces a host of other materials, including blog posts, case studies, and presentations across various contexts.
Blogs
The high cost of free sugars
Health taxes for healthier populations: Cost-effective policy to save lives
Smarter taxation can help boost government revenue and health outcomes
Is taxing sugar-sweetened beverages a sweet deal?
The seven salvos of sin (taxes)
Sugar-Sweetened Beverages and Snack Taxes: All Eyes on Mexico (and Hungary)
Selected presentations
Launch Webinar: Global Tax Program Health Taxes Knowledge Note Series
Design and Impact of Sugar-Sweetened Beverage Taxes: The Case of South Africa
Health Taxes: Policy and Practice
Side Event on Health Taxes at the 6th Annual Health Financing Forum | Recording
Other featured publications
WHO Imperial college 2023 Health Taxes: Policy and Practice
WB 2020 Knowledge Brief: Health Earmarks and Health Taxes What Do We Know?
WB 2022 Poverty and Shared Prosperity Report
WB Global Economic Prospects
Please see the following page on health taxes for a compilation of World Bank and other partner work on the topic.

Country spotlight | North Macedonia: Tobacco tax reforms support EU accession

In 2022, the Health Tax team collaborated with MTI colleagues on the development of a short assessment of health taxes in North Macedonia as an input to a Public Finance Review. Dissemination to MoF resulted in further collaboration on a comprehensive assessment of health taxes that informed a framework for policy reforms focused on EU accession. The support included funding, technical assistance, analytics and modelling of policy reforms. Using these resources, the team supported a series of in person and virtual workshops with government around the details of the reforms.

In June, the team submitted a comprehensive report to government, as well as a tobacco and alcohol tax reform simulation model that has been used for trainings and as a modality to help guide future reforms. In October, tobacco reforms were enacted, leading to a dissemination workshop in November in order to promote these recent reforms and to foster regional collaboration and address key challenges and opportunities in the field of health taxes.

The conference was attended by colleagues from the Ministry of Finance and Customs Administration, the European Commission, World Bank, International Monetary Fund, World Health Organization, and United Nations Development Program, as well as representatives of academia, civil society, and the business community.

The recent tobacco tax reforms are an important milestone in North Macedonia’s pathway to joining the European Union, and to inform future engagement between North Macedonia and the Bank. They will ensure North Macedonia’s compliance with the European Union’s alcohol and tobacco tax directives by 2030. This achievement would not have been possible without the technical assistance and support of the World Bank.