tax hpf yussuf saloojee
TRANSCRIPT
A Healthy Tax Return More money, fewer deaths
Dr Yussuf Saloojee
National Council Against Smoking
Tobacco use causes 44 000 deaths a year in South Africa (9% of all deaths). Globally it kills 6 million people a year and this will increase to over 8m by 2030.
The effect of raising tobacco excise
taxes • Higher excise taxes on cigarettes will
– reduce cigarette consumption
– reduce smoking prevalence; and
– Increase government revenues.
• An increase in “the real price of cigarettes by 10% globally would prevent: 10 million tobacco-related deaths worldwide”
World Bank, 1999
4
Tax & consumption
1st Law of Economics
• When price goes UP consumption goes DOWN.
• When price goes DOWN consumption goes UP.
Price - an important influence on short-term consumption.
Real prices and cigarette
consumption South Africa 1960-2008
R3
R4
R5
R6
R7
R8
R9
R10
R11
30
40
50
60
70
80
90
100
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Pac
ks/a
du
lt/y
ear
Year
Packs per Real retail pr.
6
Higher taxes mean higher tax
revenues
– Increases in tobacco taxes lead to increases
in tax revenues, despite reductions in tobacco
use.
Tobacco taxes and Revenuese South Africa 1980-2009
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
0
1
2
3
4
5
6 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
So
uth
Afr
ican
Ran
ds (
tho
usan
ds)
(co
nsta
nt
2005 p
rices)
So
uth
Afr
ican
Ran
ds (
co
nsta
nt
2005 p
rices)
Excise tax per pack Excise tax revenue
Source: Van Walbeek (2005), updated with data from National Treasury
Why does revenue increase even
as consumption falls?
• Tax revenue = amount sold X tax rate
• High volumes at a low price or
• Low volumes at a higher price.
South Africa 1993-2007
– Real excise tax ↑357%
– Real prices ↑146%
– Per capita consumption ↓48%
– Real excise revenue ↑215%
Is current tax policy aligned to
health policy?
• No. Tax is no longer consciously and deliberately used to control levels of tobacco consumption.
30
40
50
60
70
80
90
100
Pac
ks/a
du
lt/y
ear
Year
Packs per
The Future?
If current tax policy is maintained
tobacco use will increase
Potential Revenues for a HPF
Year Excise Tax 2% levy
Rm Rm
2008 7842 157
2007 7004 140
2006 6214 124
Levies:Trends
• National
• Road accident fund
• Plastic bags
• Toll roads
International
• Unitaid
• WHO - The Solidarity Tobacco Contribution (STC) for International Health Financin
• US Financial taxations tax
From a win – win
to a win-win-win Fewer deaths from smoking
More government revenues
More money for promoting the quality of life/
Thank You