Fiscal incentives, behavior change and health promotion: what place in the health-in-all-policies toolkit?

Abstract

Taxes, subsidies and welfare benefits may provide financial incentives to encourage healthy behaviors or discourage less healthy ones. Historically, taxes have been used in many countries to deter behaviors like tobacco smoking or harmful alcohol use. More recently, an increasing number of governments have sought to expand the scope for the use of fiscal measures in health promotion to foods and beverages high in fat, salt or sugar. A strong public health rationale, supported by a growing body of evidence of the health impacts of taxes and other fiscal measures, adds to the more traditional rationale for the use of commodity taxes, which hinges on their revenue-generating potential and their ability to address the costs imposed by consumers of health-related commodities on other individuals. Despite limitations in the existing evidence base, reviewed in this paper, taxes have been shown to generate significant health gains when applied to tobacco products and alcoholic beverages. In the case of foods and non-alcoholic beverages, the effects tend to build up over time and are stronger in people with lower socio-economic status. However, a number of potentially undesirable effects suggest that governments should exercise caution in planning and implementing taxes on health-related commodities. In particular, commodity taxes are generally regressive, and this is especially the case for taxes on tobacco, foods and non-alcoholic beverages, although the actual size of the tax burden involved is relatively modest. In addition, taxes may negatively impact on economic efficiency and social welfare, and may incentivize illicit activities.