By Jean Balchin 12/04/2018

According to a study published in the BMJ today, a significant increase in cigarette prices would aid millions of people around the world avoid poor health and extreme poverty. The study concluded that people on low incomes have the most to gain, and the researchers argue that modest action by many governments “could yield unprecedented health gains and poverty reduction.”

Smoking is a major risk factor for many cancers and for respiratory and cardiovascular disease. In New Zealand, smoking was one of the two leading modifiable risks to health in 2013. It accounted for about 9% of all illness, disability and premature mortality, according to the Ministry of Health 2016. Tobacco kills nearly 6 million people each year the world over, including 5 million from direct tobacco use, and more than 600,000 due to second-hand smoke exposure (OECD Factbook). If we extrapolate from current patterns, we can predict that smoking will be responsible for about one billion deaths in the 21st century.

Most of these deaths will be in low and middle income countries. Arguably, effective tobacco control could help avoid hundreds of millions of early death. Tobacco taxation remains the single most effective measure to increase quit rates and discourage young people from taking up smoking.

Having said that, no studies thus far have actually assessed the impact of higher tobacco taxes on health and financial outcomes across a range of countries. But with this study, researchers from the Global Tobacco Economics Consortium led by Professor Prabhat Jha from St. Michael’s Hospital and the University of Toronto and Patricio Marquez, Lead Public Health Specialist from the World Bank set out to predict the effect of a 50% increase in cigarette prices on health, poverty, and financial protection in 13 middle income countries with a total of 500 million male smokers. Prices were raised by increasing tobacco excise taxes to reach the target price in each country.

Jha, Marquez and the team employed a model to measure the impact of quitting by age and income group on life years gained, treatment costs averted, avoiding catastrophic medical costs and poverty, and additional tax revenue. They discovered that a 50% price increase would lead to about 450 million years of life gained across the 13 countries from quitting. Notably, half of these proposed years originate from China.

It was found that across all countries, men in the bottom income group (poorest 20% of the population) would gain seven times more life years than men in the top income group (richest 20% of the population – 155 v 23 million). The average number of life years gained from quitting for each smoker in the bottom income group was five times that of the top group (1.46 v 0.23 years). Of the $157bn (£113bn; €127bn) in averted treatment costs, the bottom income group would avert almost five times more than the top income group ($46bn v $10bn).

In seven countries without universal health coverage, about 15.5 million men would avoid catastrophic medical costs. As a result, 8.8 million men, half of them in the bottom income group, would avoid falling below the World Bank definition of extreme poverty.

Overall, the bottom income group would get 31% of the life years saved and 29% each of the averted disease costs and averted medical costs, while paying only 10% of the additional $122bn taxes collected.

Given that this study is a modelling one, it comes with limitations. However, the authors point out that their findings were consistent across countries and remained largely unchanged after varying some of the key assumptions.

According to the researchers, when cigarette prices are raised substantially (enough to encourage and cause many low income men to quit), this provides more health and financial gains to the poorest 20% than to the richest 20% of the population. This study not only challenge the view that tobacco taxes are more detrimental to people on low versus high incomes, but also indicates that higher tobacco taxes support the UN sustainable development goals for poverty and universal health coverage.

Undoubtedly, there is a great deal more to be learnt, yet both economists and public health advocates agree that

“a substantial price increase on tobacco will result in decreased tobacco consumption and resulting illness,”

according to US researchers in a linked editorial. Moreover, they argue that Ministers of Finance of signatory countries to the Framework Convention on Tobacco Control

“should understand the fiscal and health benefits of the tax guidelines in the framework just as clearly as the public health advocates who so vigorously support them.”

Thankfully, smoking rates in New Zealand continue to reduce, with 16% of adults currently smoking (this has dropped from 25% in 1996/97).

You can read the study here, and the associated editorial opinion piece here. You can also read more about New Zealand’s Tobacco Control Programme here.

Image: Photo by Patrick Brinksma on Unsplash

0 Responses to “Higher cigarette prices would help millions avoid poor health and extreme poverty”

  • I’d run the numbers here 2 years ago for NZ. I benchmarked it around Maori smoking rates.

    “So for every 1000 Maori, we have [after the tax hikes]:
    773 who would not have smoked regardless,
    13 who quit because of the tax and enjoy health benefits, save some money, and may or may not be happier from having quit – we’ll assume happier,
    214 who keep smoking about 90% as much as they had been smoking. Each pays about $1020 more in excise per year than they otherwise would have paid.”

    New Zealand’s tobacco control zealots simply don’t care about that. They pretend that it’s all good and say stuff like “While the tax is regressive the health benefits are progressive!” with a big cheery smile and ignoring that the number of people who’ll pay a ton more in tax is much bigger than the number of people who’ll enjoy health benefits, and that *They Are Different People*. There’s no attempt to compensate poor smoking households that continue to smoke.

    But the world is moving past them – or at least New Zealand is. As much as the Otago types want to lock everything down and minimise the potential health benefits of people switching to safer products, the courts are already moving past them. The court decision a fortnight ago legalised Heat Not Burn products, pulled vaping out of the SmokeFree Environments Act, and arguably legalised sale and supply of vaping products entirely [caveat: I Am Not A Lawyer and this is not legal advice].

    It still sucks, because there will always be people whose needs are not met by any of the safer products and who’ll still be stuck paying stupid amounts of money in excise. But at least there’s a way out for others.