Raising ‘sin taxes’ on harmful products could save 50 million lives by 2075

Task force examines effects of increasing prices on unhealthy goods and the benefits for public health and global economies

Since 2017, energy drinks sold in the UAE have been subject to a 100 per cent excise tax, with carbonated soft drinks becoming 50 per cent more expensive. Pawan Singh / The National

Increasing prices on products harmful to public health could generate $3.7 trillion for ailing economies around the world and save millions of lives, a report on so-called sin taxes has found.

About 50 million premature deaths could be prevented by 2075, if all countries increased the prices of products such as cigarettes by 50 per cent, research commissioned by the Task Force on Fiscal Policy for Health, a think tank of economists, former politicians and health authorities, showed.

Diseases linked to the consumption of tobacco, alcohol and sugary drinks kill more than 10 million people around the world every year, with economic costs topping $4 trillion.

“Taxing products harmful to our health has proven to be a highly effective way to reduce death and disease, while also raising revenue that governments can use to improve public health,” said Michael Bloomberg, co-chairman of the Task Force and World Health Organisation global ambassador for noncommunicable diseases and injuries. “Raising health taxes now, especially on cigarettes, can help more countries save lives and address their most urgent fiscal challenges.”

Seven years after the UAE imposed a 50 per cent tax on fizzy drinks, diabetes rates have declined. Since 2017, energy drinks sold in the UAE have also been subject to a 100 per cent excise tax.

The move was aimed at reducing diabetes rates in the country from about 19 per cent to 16 per cent by 2021. By 2022, the International Diabetes Federation reported 990,900 adults in the UAE were diabetic, which is equal to about 12 per cent of the population.

Multi-factor approach

But it will take more than price increases to tackle chronic illnesses resulting from poor diet. Dr Hala Abdulkareem, a family medicine consultant at Burjeel Medical City, said the "issue is more complex than just a tax".

“Children are living in a bigger world now, with more social media influences, and the norm is they consume sugary drinks, as there's no banning online advertisements," she said.

In the UK, a drop in obesity rates has been reported for the first time this century thanks to a sugar tax introduced in 2018. It added £0.24 ($0.32) to a litre of a drink containing 8g of sugar for every 100 millilitres or more, and £0.18 a litre to drinks with 5g to 8g for every 100ml.

Of the 9,000 people whose body mass index was checked under the UK's national health survey in 2022, 27 per cent of children were either overweight or obese, down from a 34 per cent peak in 2004. In adults, 64 per cent had a BMI measure of 25 or above, but that figure has plateaued since 2017.

Sugar taxes pressed soft drink manufacturers to change products to avoid the tax, leading to a reduction in sugar content. In the UK, that tax encouraged the reformulation of sugary drinks, with more than 47,000 tonnes of sugar removed from soft drinks between 2015 and 2019.

Advertising ban

The UK's Labour government, elected in the July general election, plans to go further by banning adverts containing junk food loaded with salt and sugar before 9pm. The initiative is to take effect from October 2025.

“We know processed food, smoking and tobacco are the root cause of chronic, long-term health problems,” said Dr Abdulkareem. “In Sheffield [in England], there was a lot of poverty that influenced the health choices of patients. The dilemma is very different here in the UAE.

“Making healthy food more affordable and having school menus more interesting to children can help. But easy access to fast food via delivery apps is one of the biggest issues here with children. I've seen kids in my clinic with full access to their phones and fast food available on request. Parents are unaware their kids are ordering fast food in the middle of the night because they have the access – it’s a very complex problem to solve.”

Revenue raiser

Sin taxes on unhealthy products have had mixed results around the world. With the revenue generated offering potential for new health policies such as smoking cessation programmes, health insurance subsidies and workshops, nations that introduce the taxes have opportunities to boost public health.

In Mexico, where about 71 per cent of adults were either obese or overweight, a tax of one peso ($0.05) a litre was added to sugar-loaded drinks in 2014. Meanwhile, an 8 per cent junk food tax was applied to non-essential foods containing 275 calories for every 100g.

The measure generated an extra $5.1 billion in tax revenue over the following three years and cut the consumption of sugary drinks by 7.6 per cent. New government funds were pumped into health campaigns to promote obesity prevention programmes and provide fresh drinking water free of charge in schools and public places.

Efforts to raise tobacco taxes should be prioritised, with such products responsible for more than eight million deaths a year, the Task Force report found. Taxes on tobacco have lapsed since 2019, with 87 per cent of the world’s one billion smokers living in countries where cigarettes are the same price or cheaper than they were in 2019. Raising tobacco taxes would induce more than 100 million smokers to quit, experts said.

The Sin Tax Reform Act in the Philippines meant the cheapest pack of cigarettes rose in price from five pesos ($0.09) to 30 pesos from 2012 to 2018. Cigarette sales slumped by 23 per cent as a result, with the Global Adult Tobacco Survey reporting that smoking rates in the country fell from 29.7 per cent in 2009 to 19.5 per cent in 2022.

Government finances also enjoyed a significant boost, with the tax generating an extra $1.2 billion between 2012 and 2015, tripling the Philippine health department’s budget to $2.19 billion. Extra funds were spent on topping up health insurance premiums for the poorest in society, expanding coverage for 10.1 million more families and increasing benefits for 5.4 million retired people.

In the UK, sugar taxes generated about £334 million in the 2021-2022 fiscal year. Research shows that treating obesity-related poor health costs the country's National Health Service about £6.5 million a year.

“Obesity and Type 2 diabetes are influenced by many factors, including overall diet, physical activity, genetics and socioeconomic status,” said Mansoor Ahmed, an independent healthcare expert in the Mena region. “While sugar tax does reduce calorie intake, it's not a singular solution to these health conditions. Reducing rates may take years or even decades to fully manifest. Public health experts predict these taxes could have a significant long-term impact, but the time frame is too short to observe substantial reductions in national health statistics.”

After sugar taxes were imposed by the UAE and Saudi Arabia in 2017, Oman, Bahrain, Kuwait and Qatar followed suit. The move was motivated by the region’s high rates of obesity and diabetes.

Since then, Bahrain has reported the biggest drop in diabetes, from 19.5 per cent of the population in 2011 to 11.3 per cent in 2021. But that success has not yet been replicated in other Gulf nations.

Oman reported an increase in diabetes rates from 10.5 per cent to 13.8 per cent. In Kuwait, 24.9 per cent of people are now affected, up from 20.7 per cent a decade ago.

“The Middle East, especially the GCC, has one of the highest obesity and diabetic rate globally, having direct impact on individuals and indirectly on public healthcare expenditures,” said Mr Ahmed. “Sugar tax is only one piece of the puzzle in reducing obesity and diabetics, as it requires a combination of lifestyle changes, medical interventions and environmental support to control obesity and diabetics. With a combination of these strategies, individuals can create a sustainable plan to reduce obesity and improve overall health.”