Taxes on tobacco, alcohol and sugary drinks offer African countries the opportunity to regain their “sovereignty” in response to the collapse of donor funding, according to a new report on health financing compiled by Vital Strategies.

Vital CEO Mary-Ann Etiebet described the rise of non-communicable diseases (NCDs) fueled by these unhealthy products as a “burning platform” – already accounting for a third of Africa’s deaths and set to surpass the burden of infectious disease within five years.

“Low- and middle-income countries are at risk of losing up to $21 trillion by 2030 if no action is taken on the prevention and control of NCDs,” Etiebet told the launch of the report this week.

“External health aid is falling sharply and is projected to fall even further, tightening fiscal space and reducing budgets available to support country health needs,” she added.

Official development assistance (ODA) for health in Africa has fallen by a massive 70% since 2021 – from $80 billion to $24 billion – mostly as a result of the US’s abrupt cancellation of longstanding donor commitments earlier this year.

Serah Makka, ONE’s executive director for Africa, said that the African Union agenda for 2063 and other continental plans call for “self-financing, resilient health systems”. 

But where are governments going to get funds from when 24 African countries are at risk of debt distress and 34 countries pay more to service their debt than to health and education combined, she asked.

“This is where the innovation of taxes comes in, because, again, it’s been proven to provide more resources and health benefits,” said Makka.

Specific tax works best

Professor Jeffrey Drope, director of the Economics for Health team at Johns Hopkins University, described the lack of health taxes in many African countries as “untapped potential” to raise revenues and improve public health.

Vietnam was an example of what is possible, added Drope. In the past few months, it has restructured its tobacco tax, which will “raise rates significantly” and imposed a tax on sugary drinks for the first time. Ethiopia and Cabo Verde are also increasing their taxation of unhealthy products.

“Health taxes work,” he stressed. “When the taxes go up, the prices go up and consumption of these products goes down.

“ We know that, for example, for tobacco and alcohol, a 10% increase in price will lead to around a 5% decrease in consumption. That’s a lot. And if you think about the fact that a lot of these countries are raising their taxes and prices a lot more than 10% you can see that the effects on consumption are going to be enormous and that the public health rewards are also going to be enormous as well.”

The revenue can be used to fund education and health services, including programmes to help people quit smoking or alcohol, added Drope.

Corne van Walbeek, director of the Research Unit on the Economics of Excisable Products (REEP) at the University of Cape Town, said that the best tax is a “specific tax”.

In the case of cigarettes, this would be a certain amount of dollars per pack of cigarettes – rather than a tax based on the value or length of the cigarette (known as an ad valorem tax). 

For alcohol and sugary drinks, the most effective tax would tax the harmful ingredient – the alcohol or sugar content. This provided suppliers with an incentive to reduce the volume of the harmful substance, which has happened in South Africa, where some producers of sugary drinks and beer have reduced sugar and alcohol content respectively, he said.

Scare-mongering

However, the unhealthy industries are pushing back against taxes, Etiebet pointed out. This has emerged in negotiations on the political declaration, which is due to be adopted at the UN High-Level Meeting (HLM) on NCDs in September.

The latest draft has “weakened commitments with regard to health taxes,” she said.

The NCD Alliance has described the weaker language in the declaration as evidence of lobbying by “big tobacco, alcohol, junk food, and fossil fuels”.

“At a time of fiscal pressures, shrinking global health funding, and increased emphasis on domestic resource mobilisation, health taxes are a golden opportunity to both generate revenue and reduce the burden of NCDs and associated healthcare costs,” said Alison Cox, director of policy and advocacy at the NCD Alliance.

Vital Strategies has urged the negotiators to “reinstate explicit commitment to health taxes” on tobacco, alcohol and sugar-sweetened beverages.

It has also urged negotiators to put back references to the World Health Organization’s (WHO)  “Best Buy” policy recommendations for reducing alcohol consumption and related diseases, which include raising taxes, restricting marketing and regulating availability.

However, sources close to the negotiations told Health Policy Watch that the United States had insisted that references to the WHO in the declaration to be scrapped. The Trump administration has withdrawn from the WHO.

But Makka said that West African governments and the West African Health Organisation are “looking at how we can increase health security through health taxes for universal health coverage”. 

“Regional action and health taxes are going to be very important for Africa. And finally, there is political alignment. So this is the time. This is the moment. We’ve seen countries like South Africa, Nigeria and Kenya, already exploring and implementing excise taxes.”

Image Credits: Kerry Cullinan.