The Role of Fiscal Policies in Health Promotion

Taxes and other fiscal measures on health-related commodities are in widespread use. Alcoholic beverages andtobacco products have been subjected to taxation for a long time in most countries. Several OECD governments havepassed legislation to increase existing taxes or to introduce new taxes on foods high in salt, sugar or fat in the past fewyears. Traditionally, commodity taxes have been primarily seen as a source of fiscal revenues and a way to addressconsumption externalities. More recently, an increased emphasis has been placed on the potential health benefits ofcommodity taxation, as evidence emerged of the adverse public health, social and economic consequences of theconsumption of a range of commodities.This paper provides a review of the theoretical arguments and empirical evidence on the key factors thatgovernments must address when considering the adoption of fiscal measures for health promotion, highlighting thestrengths, as well as the limitations and pitfalls, of specific measures. The main focus of this paper is on taxes onhealth-related commodities, although a range of other fiscal measures may potentially be used in health promotion.         Existing evidence of effects on consumption and health outcomes points to the conclusion that taxes on healthrelatedcommodities can be a powerful tool for health promotion, although the variety and complexity of the effects theygenerate require careful consideration by policy makers who intend to adopt new taxes or reform existing ones. Thearguments in support of taxes being used to attain public health objectives are strong for tobacco products andalcoholic beverages, but less clear-cut for foods, in which case the value of using taxes is highly dependent on theirdesign and on the context in which they would be applied.      