Tax hpf yussuf saloojee

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Tax hpf yussuf saloojee

  1. 1. A Healthy Tax Return More money, fewer deaths Dr Yussuf SaloojeeNational Council Against Smoking
  2. 2. Tobacco use causes44 000 deaths a yearin South Africa (9% ofall deaths).Globally it kills 6million people a yearand this will increaseto over 8m by 2030.
  3. 3. The effect of raising tobacco excise taxes• Higher excise taxes on cigarettes will – reduce cigarette consumption – reduce smoking prevalence; and – Increase government revenues.• An increase in “the real price of cigarettes by 10% globally would prevent: 10 million tobacco-related deaths worldwide” World Bank, 1999
  4. 4. Tax & consumption 1st Law of Economics• When price goes UP consumption goes DOWN.• When price goes DOWN consumption goes UP.Price - an important influence on short-term consumption. 4
  5. 5. Real prices and cigarette consumption South Africa 1960-2008 100 R11 90 R10 R9 80 R8Packs/adult/year 70 R7 60 R6 50 R5 40 R4 30 R3 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year Packs per Real retail pr.
  6. 6. Higher taxes mean higher tax revenues– Increases in tobacco taxes lead to increases in tax revenues, despite reductions in tobacco use. 6
  7. 7. South African Rands (constant 2005 prices) 0 1 2 3 4 5 1980 6 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Excise tax per pack 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Excise tax revenue 2004 2005 South Africa 1980-2009 2006 2007 2008 2009 0Source: Van Walbeek (2005), updated with data from National Treasury 1 000 2 000 3 000 4 000 5 000 6 000 7 000 Tobacco taxes and Revenuese South African Rands (thousands) (constant 2005 prices)
  8. 8. Why does revenue increase even as consumption falls?• Tax revenue = amount sold X tax rate• High volumes at a low price or• Low volumes at a higher price.
  9. 9. South Africa 1993-2007– Real excise tax ↑357%– Real prices ↑146%– Per capita consumption ↓48%– Real excise revenue ↑215%
  10. 10. Is current tax policy aligned to health policy? • No. Tax is no longer consciously and deliberately used to control levels of tobacco consumption. 100 90 80 70Packs/adult/year 60 50 40 30 Year Packs per
  11. 11. The Future?If current tax policy is maintained tobacco use will increase
  12. 12. Potential Revenues for a HPFYear Excise Tax 2% levy Rm Rm2008 7842 1572007 7004 1402006 6214 124
  13. 13. Levies:Trends• National• Road accident fund• Plastic bags• Toll roadsInternational• Unitaid• WHO - The Solidarity Tobacco Contribution (STC) for International Health Financin• US Financial taxations tax
  14. 14. From a win – win to a win-win-winFewer deaths from smokingMore government revenuesMore money for promoting the quality of life/
  15. 15. Thank You

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