Health tax
On the front page of the September 1, 2022 issue of the Daily Graphic was the headline, “Silent Killer on the prowl: 35% Adults hypertensive”. The publication mentioned two main risk factors, modifiable and non-modifiable risk factors.
Where modifiable risk factors included unhealthy diets, physical inactivity, consumption of tobacco, and being overweight. Should this persist, what will be the effect on the country’s growth and development agenda?
Advertisement
Empirically, high levels of population health go hand in hand with levels of national income (ref: David Bloom and David Canning, 2008).
According to the “DAC Guideline and Reference Series: Poverty and Health”, good health contributes to development; higher labour productivity, higher rates of domestic and foreign investment, improved human capital, and higher rates of national savings and demographic changes.
Factors
Modifiable risk factors, as stated, have more to do with lifestyle or behaviour. Health-related behaviours of an individual are based on several factors such as, economic, socio-cultural and environmental.
The individual may not be able to make the right choices, if policies are not implemented to control health-related behaviours that will reduce the rate of the disease.
The government can control the behaviours in a number of ways, such as health taxes, physical activity tax incentives, among others, as part of a comprehensive strategy to address these health. Our focus in this article is restricted to health taxes.
Health tax
According to the Organisation for Economic Cooperation and Development (OECD), health taxes “are taxes levied on goods that adversely affect health”. Which includes tobacco, alcoholic and non-alcoholic beverages certain foods that contain fats, salt and sugar.
The concept of a health tax is to increase the price of a product to the consumer which will subsequently reduce or discourage consumption and improve health.
A common tax that is used is excise duty. This is because excise duty is used to target specific products and can be structured in a way that will either reduce the consumption of the product or the content of the unhealthy product.
For instance, excise duty can be structured based on the volume of alcohol, fats, salt, or sugar content in a product. If excise duty is high on specific products based on content, either the price becomes expensive, or manufacturers may reduce their content.
In whichever way, the effectiveness of a tax depends on the price elasticity of demand.
Excise duty
Currently, Ghana’s excise duty is based on the ex-factory price of the product, in this case, the excise duty may be increased or introduced on products such as oil.
Since the current excise duty regime is based on value, maybe the government should start focusing on content as well. This will help reduce the contents of these foods.
It is common to find sugar sweetened beverages on the market being sold for GH¢1.00 and this should even give an idea of the nutritional value of such products.
These products are being sold to the less privileged in society who cannot afford an annual health check.
The writer is a partner, EA Assurance and Associates. E-mail: [email protected]