PHA-Exchange> Tobacco Taxes Fund Preventative Health Programmes in Thailand

[FCA Secretariat]

Dear PHA colleagues

Recently in Thailand the government has established a health promotion fund
with funds coming from tobacco and alcohol taxes. I have attached below an
article on the issue.  This is wonderful news for health workers in Thailand
and hopefully Thailand's success will help encourage others to push for
similar funds in their own countries.

The system is an example of win-win situation.

1. High taxes are highly effective in reducing smoking prevalence. Higher
taxes encourage smokers to quit and prevent others young people from
starting. They also reduce the number of ex-smokers who return to cigarettes
and reduce consumption among continuing smokers. Source: 'Curbing the
Epidemic', World Bank, 2000.)

2. The funds taken from tobacco and alcohol taxes can be used to fund
projects often neglected.

I strongly urge all NGOs to advocate for tobacco taxes to be raised and some
of the proceeds to be used in health promotion.

If anyone would like further information about ThaiHealth, tobacco taxes or
related issues please do not hesitate to contact me.

Sincerely
Belinda Hughes
hughesb at globalink.org

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News Article:

Sin taxes to be diverted into new health promotion fund

by Wut Nontharit

THAILAND;
Source: Bangkok Post, Sunday, 8/12/01

Two percent of annual state revenue from tobacco and liquor tariffs will be
deducted as contributions to a new health care fund to be set up under a
draft law which sailed through the Senate on Friday.

The Senate voted 94:3 to endorse an amendment to the Health Promotion Fund
bill proposed by cabinet.

Under the draft law, the health promotion fund will be established in the
form of a legal entity with the aim of supporting and encouraging Thais to
keep themselves fit and healthy and refrain from smoking, drinking or
consuming anything bad for health.

The fund will be managed by a 19-member committee made up of state and
private sector representatives. The panel will be chaired by the prime
minister. Each committee member could serve a maximum of two four-year
terms.

A separate seven-member panel will be set up to evaluate the work of the
fund management committee.

To maintain the fund, 2% of state revenue from annual tobacco and liquor
sales, worth some 1.4 billion baht, will be diverted by the Excise and
Customs departments.

Under the bill, the Health Promotion Office founded last year will be
dissolved and its personnel reassigned to run the fund.

However, the Senate warned the government to be more careful next time in
proposing a law authorising deduction of taxes as contributions to a fund.

Such a practice was contrary to financial discipline.


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FINANCING HEALTH PROMOTION

The World Bank has made it clear that investment in health promotion and
disease prevention strategies represent the most cost effective way to
improve the health of the world's people. Finding the money to invest in
health promotion is often a problem, especially for countries that have
other priorities competing for funding. However, the VicHealth model
exemplifies a way of taxing the most harmful disease-creating products to
promote good health. The tax, which is widely supported by the public,
achieves many positive health goals at once. The increased price of
cigarettes causes a disincentive to smoke, especially among young people.
Additionally, a portion of the revenue from this tax can be dedicated to
improving health, and in particular, towards tobacco-control activities and
programmes. A tobacco tax dedicated to health promotion also sends a
significant symbolic message to the tobacco industry regarding tobacco
control policy objectives. With a dedicated tax, money for tobacco control
and sponsorship replacement would not compete with other claims on the
health budget.

There are a number of possible options for funding health promotion
activities, and each country must take into account its unique institutional
and cultural features when planning the ideal method for generating health
promotion funds. One method for generating funding would be through
dedicated taxes on tobacco products. For example, as an integral component
of comprehensive tobacco control programmes, an excise tax could be levied
on tobacco products. As proven by a number of studies, the increased price
of tobacco products would also discourage consumption, particularly among
youth, and the funds could be used to finance Health Promotion Foundations,
such as in many Australian states. Dedicated excise taxes can also be used
to fund anti-tobacco health education even if a full range of tobacco
control measures have not yet been implemented. Examples of where this has
been successfully applied include the states of California and
Massachusetts, in the United States. It would also be possible to obtain
funding for tobacco control activities by taxing tobacco company profits or
tobacco advertising.

Another possibility for funding health promotion activities would be through
general taxation revenue, also in the context of a comprehensive tobacco
control programme. These expenditures can then be offset by revenue from
increased tobacco excise taxes, a model which is being used very
successfully in New Zealand. The expenditures can alternatively be offset by
taxes on tobacco company profits, as in Canada. As exemplified in Geneva, it
may also be possible to use funds from general taxation revenue, without
instituting strategies to offset this revenue. To replace tobacco
sponsorship, it may also be possible to encourage private companies,
particularly those involved in the realm of leisure products or services, to
join in partnership to fund activities which previously were dominated by
tobacco sponsorship.

Source: http://www.who.int/archives/ntday/ntday96/pk96_8.htm

***

Resources

The Fight Against Big Tobacco: Domestic Battles, Global Implications
By Robert Weissman, Special to CorpWatch, April 26, 2001
http://www.corpwatch.org/issues/tobacco/featured/2001/rweissmanc.html

Bush Administration Tobacco Industry Ties
By Robert Weissman, Special to CorpWatch, April 2001
http://www.corpwatch.org/issues/tobacco/featured/2001/rweissmanb.html

Tobacco and Poverty
By Mary Assunta
http://www.fctc.org/assunta2.shtml

Fact Sheet - Tobacco At A Glance
http://wbln0018.worldbank.org/HDNet/HDdocs.nsf/c840b59b6982d2498525670c004de
f60/88db854ff9b86b9a85256a3b0055aabf?OpenDocument

World Bank on Tobacco
http://www1.worldbank.org/tobacco/