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Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths
The article reviews the large body of evidence on how taxation affects the consumption of tobacco, alcohol, and sugar-sweetened beverages (SSB). There is abundant evidence that demand for tobacco, alcohol, and SSB is price-responsive and that tax changes are quickly passed on to consumers. This sugg...
Autores principales: | , , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
BMJ Publishing Group
2023
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10565262/ https://www.ncbi.nlm.nih.gov/pubmed/37813440 http://dx.doi.org/10.1136/bmjgh-2023-011866 |
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author | Paraje, Guillermo R Jha, Prabhat Savedoff, William Fuchs, Alan |
author_facet | Paraje, Guillermo R Jha, Prabhat Savedoff, William Fuchs, Alan |
author_sort | Paraje, Guillermo R |
collection | PubMed |
description | The article reviews the large body of evidence on how taxation affects the consumption of tobacco, alcohol, and sugar-sweetened beverages (SSB). There is abundant evidence that demand for tobacco, alcohol, and SSB is price-responsive and that tax changes are quickly passed on to consumers. This suggests that taxes can be highly effective in changing consumption and reducing the burden of diseases associated with consuming these products. Tobacco, alcohol, and SSB industries oppose taxation on similar grounds, mostly on the regressivity of taxes since regressive taxes take a larger percentage of income from low income earners than from middle and high income earners; but also on the effects taxes might have on employment and economic activity; and, in the case of tobacco, the effects taxation has on illicit trade. Contrary to industry arguments, evidence shows that taxation may have short-term negative financial consequences for low-income households. However, medium and long-term financial benefits from reduced healthcare costs, better health, and welfare largely compensate for such consequences. Moreover, taxation does not negatively affect aggregate economic activity or employment, as consumers switch demand to other products that generate employment and may compensate for any employment loss in taxed sectors. Evidence also shows the revenues generated are generally spent on labour-intensive services. In the case of illicit trade in tobacco, evidence shows that illicit trade has not increased globally (rather the opposite) despite increases in tobacco taxes. Profit-maximising smugglers increase illicit cigarette prices along with the increases in licit cigarette prices. This implies that even when increased taxes divert some demand to the illicit market, they push prices up in the illicit market, discouraging consumption. |
format | Online Article Text |
id | pubmed-10565262 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2023 |
publisher | BMJ Publishing Group |
record_format | MEDLINE/PubMed |
spelling | pubmed-105652622023-10-12 Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths Paraje, Guillermo R Jha, Prabhat Savedoff, William Fuchs, Alan BMJ Glob Health Analysis The article reviews the large body of evidence on how taxation affects the consumption of tobacco, alcohol, and sugar-sweetened beverages (SSB). There is abundant evidence that demand for tobacco, alcohol, and SSB is price-responsive and that tax changes are quickly passed on to consumers. This suggests that taxes can be highly effective in changing consumption and reducing the burden of diseases associated with consuming these products. Tobacco, alcohol, and SSB industries oppose taxation on similar grounds, mostly on the regressivity of taxes since regressive taxes take a larger percentage of income from low income earners than from middle and high income earners; but also on the effects taxes might have on employment and economic activity; and, in the case of tobacco, the effects taxation has on illicit trade. Contrary to industry arguments, evidence shows that taxation may have short-term negative financial consequences for low-income households. However, medium and long-term financial benefits from reduced healthcare costs, better health, and welfare largely compensate for such consequences. Moreover, taxation does not negatively affect aggregate economic activity or employment, as consumers switch demand to other products that generate employment and may compensate for any employment loss in taxed sectors. Evidence also shows the revenues generated are generally spent on labour-intensive services. In the case of illicit trade in tobacco, evidence shows that illicit trade has not increased globally (rather the opposite) despite increases in tobacco taxes. Profit-maximising smugglers increase illicit cigarette prices along with the increases in licit cigarette prices. This implies that even when increased taxes divert some demand to the illicit market, they push prices up in the illicit market, discouraging consumption. BMJ Publishing Group 2023-10-09 /pmc/articles/PMC10565262/ /pubmed/37813440 http://dx.doi.org/10.1136/bmjgh-2023-011866 Text en © Author(s) (or their employer(s)) 2023. Re-use permitted under CC BY. Published by BMJ. https://creativecommons.org/licenses/by/4.0/This is an open access article distributed in accordance with the Creative Commons Attribution 4.0 Unported (CC BY 4.0) license, which permits others to copy, redistribute, remix, transform and build upon this work for any purpose, provided the original work is properly cited, a link to the licence is given, and indication of whether changes were made. See: https://creativecommons.org/licenses/by/4.0/. |
spellingShingle | Analysis Paraje, Guillermo R Jha, Prabhat Savedoff, William Fuchs, Alan Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title | Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title_full | Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title_fullStr | Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title_full_unstemmed | Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title_short | Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
title_sort | taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths |
topic | Analysis |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10565262/ https://www.ncbi.nlm.nih.gov/pubmed/37813440 http://dx.doi.org/10.1136/bmjgh-2023-011866 |
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