Distributional health and financial consequences of increased cigarette tax in Iran: extended cost-effectiveness analysis

Behzad Raei,Mehdi Yaseri,Ahad Alizadeh,Sara Emamgholipour,Amirhossein Takian,Ghahreman Abdoli

doi:10.1186/s13561-021-00328-w

Abstract

BackgroundTo assess the potential impact of a tax-induced cigarette price increase on financial and health outcomes by different socioeconomic groups.MethodsIn a modeled condition using pooled cross-section data from Household Income and Expenditure Survey (2002–2017) and Iran 2019 population data, a methodology of an extended cost effectiveness analysis (ECEA) was applied to model the impact on cigarette consumption of hypothetically increased cigarette tax. The methodology was employed to evaluate: [1] health benefits (premature deaths averted); [2] health expenditures regarding smoking-related disease treatment averted; [3] additional tax revenues raised; [4] change in household expenditures on cigarettes; and [5] financial risk protection among male Iranian smokers in a time span of 60 years following a one-time increase in cigarette price of 75%. The Stata version 15.1 (StataCorp., College Station, TX, USA) was used to perform the relevant analysis and estimate regression models.ResultsA 75% increase in cigarettes price through taxation would reduce the number of smokers by more than half a million, 11% of them in the poorest quintile; save about 1.9 million years of life (11% of which would be gained in the lowest quintile compared to 20% in the highest one); eliminate a total of US$196.4 million of health expenditures (9% of which would benefit the bottom quintile). Such a policy could raise the additional annual tax revenues by roughly US$ 1 billion, where the top two quintiles bear around 46% of the total tax burden. We estimated that the tax increase would avert an estimated 56,287 cases of catastrophic expenditure that wholly concentrated among the bottom two expenditure quintiles.ConclusionIncreasing cigarette tax can provide health and financial benefits, and would be pro-poor in terms of health gains, Out-of-Pocket (OOP) savings, and financial risk protection against smoking-related diseases.

Highlights

Tobacco use is extensively acknowledged to be causally linked to developing communicable and noncommunicable diseases (NCDs) [1, 2]
In a modeled condition using pooled cross-section data from Household Income and Expenditure Survey (HIES) from 2002 to 2017 and Iran 2019 population data, a methodology of effectiveness analysis (ECEA) was applied to model the impact on cigarette consumption of hypothetically increased cigarette tax among male Iranian smokers in a time span of 60 years following a one-time increase in cigarette price of 75%
In terms of financial risk protection, we estimated that 17,244 new poverty cases and 56,287 cases of catastrophic health expenditures would be averted following a reduction in health expenses resulting from the implementation of the tax policy. This is the first study in Iran conducted by employing a method of ECEA to quantify the effect of a 75% price increase in cigarettes as proposed by WHO on health benefits, health expenditures, additional tax revenues, changes in household expenditures on the cigarette, and financial risk protection

Summary

Introduction

Tobacco use is extensively acknowledged to be causally linked to developing communicable and noncommunicable diseases (NCDs) [1, 2]. According to the Ministry of Health and Medical Education (MOHME), the total number of deaths caused by smoking in Iran in 2013 was almost 70,000. This increased from 50,000 in 2006 and 55,000 in 2008. Among Iranian male cigarette smokers, we quantify the distributional impacts (across expenditure quintiles) of a 75% simulated tax-induced cigarette price increase in terms of: public health benefits (averted premature deaths), health care cost savings (averted treatment cost of tobacco-related diseases), extra tax revenues stemming from increased cigarette tax rates, as well as financial risk protection (averted out-of-pocket and averted cases of impoverishment health expenditures). To assess the potential impact of a tax-induced cigarette price increase on financial and health outcomes by different socioeconomic groups

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Discussion

Conclusion