Taxes on Tobacco, Alcohol, and Sugar-Sweetened Beverages in Low- and Middle-Income Countries (Global)January 15, 2019 - May 31, 2019
In high-income countries, increasing taxes on “bads” such as tobacco, alcohol, and sugar-sweetened beverages has been shown to generate government revenue and reduce consumption. In many low- and middle-income countries, taxes on these products exist, but rates are so low that the effect on consumption is minimal. Moreover, policymakers are unsure whether increased tax rates would result in an amount of additional tax revenue that is meaningful when compared to indicators such as out-of-pocket expenditure on healthcare.
WDI developed a set of excise tax revenue simulations for these “bads” in 16 low- and middle-income countries. Simulations used several alternative calculation methods to “triangulate” estimates for the additional tax revenue that could be generated with higher excise tax rates. Results indicate that the additional excise tax revenue would cover a significant proportion of current out-of-pocket expenditure on health for the 16 countries. These results were used during a workshop on domestic resource mobilization in low- and middle-income countries organized by the Center for Global Development.