WHO: Alcohol and tobacco should become more expen­sive.

On 3 July, the World Health Organization (WHO) launched an initiative aimed at curbing non-communicable diseases. To this end, it wants prices for tobacco, alcohol, and sugary drinks to increase by at least 50 per cent by the year 2035. The key lever for this is excise taxation, which is to be raised by governments as necessary. This demand is a core element of the initiative “3 by 35”.

Adjusting National Tax Poli­cies

The “3 by 35” initiative is conceived as a collaborative alliance of the WHO, national governments, civil society, academic institutions, and other development partners. Together, they aim to support countries in designing taxation strategies tailored to local contexts and establishing suitable legal and administrative frameworks. Partners already include the Organisation for Economic Co-operation and Development (OECD), the World Bank, the United Nations Development Programme (UNDP), the UK’s Foreign, Commonwealth & Development Office, the US-based think tank Center for Global Development (CGD), the global civil society network NCD Alliance, among others.

Health Taxes Are Effec­tive...

The WHO is pursuing two main goals with its new initiative. Firstly, it aims to reduce the incidence of non-communicable diseases such as heart disease, cancer, and diabetes, which account for 75 per cent of all deaths. High prices could be an effective countermeasure, according to the WHO. A 50 per cent price increase could prevent 50 million deaths over the next 50 years.

…and Effi­cient

Health taxes are also considered efficient. They not only lead to a reduction in harmful consumption but also generate public revenues. These funds can and should be used by governments to invest in healthcare systems or social protection. Given the ongoing decline in official development assistance, many countries are in urgent need of sustainable, domestically sourced funding. The WHO estimates that this approach could mobilise one trillion US dollars globally.

Devel­op­ments at the EU Level

Tobacco taxation is also on the agenda of the European Commission. Here, too, the aim is to significantly raise taxes on cigars, cigarillos and cigarettes—potentially by triple-digit percentages. In addition, new products such as e-cigarettes and vapourisers for heating tobacco are to be included, as they are not yet covered by the directive last revised in 2011. The Commission intends to present its amendment proposal on 16 July.

The Problem with Earmarking

There is no automatic mechanism at the international or European level to ensure that additional excise revenues are allocated to strengthening healthcare systems. Agreements must be reached individually with each cooperating country, and existing systems may need to be adjusted. Earmarking is rarely used for excise taxes. In Germany, for example, the principle of non-affectation applies, meaning all revenues form part of a general financial pool to meet overall expenditure needs. Direct earmarking is generally excluded, with only a few exceptions.