death and taxes by dr. prabhat jha, cghr/university of toronto

7/31/2019 Death and Taxes by Dr. Prabhat Jha, CGHR/University of Toronto

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Death and TaxesPrabhat Jha

Li Ka Shing Knowledge InstituteSt. Michaels Hospital, Dalla Lana School of Public Health,

Universit of Toronto

On behalf of the Tobacco Economics in India group and the Million Death

Study Collaborators

Support: Bill and Melinda Gates Foundation, NIH, CIDA

Twitter: @Cghr_org

Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect theviews or policies of the Asian Development Bank( ADB), or its Board of Governors, or the governments they represent. ADB

CGHR.ORG

does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence oftheir use. Terminology used may not necessarily be consistent with ADB official terms.


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CONCLUSI ONS:ct ons t o save at east ves

Take tobacco seriously: big cause of death and big

Focus on adults stopping as well as kids

retail price, get at least 30% of current smokers to

quit (and prevent kids from starting), and raisemore tax revenue

Know and refute objections to higher tax: (i) harms

e poor- ea ga ns are pro-poor an ax ur enon the poor might not increase; (ii) smuggling-

CGHR.ORG

, ,

and coordination Source: Jha, et al EPW


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A billion tobacco deaths in the 21st

cen ury on curren smo ng pa erns

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Source: Peto et al, Nature Med 2006; Jha, NatureCancer Reviews, 2009


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Richard Doll: mortality and smoking inmale British doctors born 1900-30

34,000 men recruited in 1951 & followed up to 2001

r z r r r r - , y

did not smoke substantial numbers of cigarettes when

young

Bigger hazard for smokers born 1900-1930:

Those who stopped before age 40 (preferably well

CGHR.ORG

middle age


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USNHIS:Malesage35+,recruited

,

10 years

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USNHIS:Femalesage35+,recruited

,

10 years

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USNationalHealthInterviewSurvey

19972004cohort,followedformortalitythroughthe

about106Kmenwith8Kdeaths

about 136K women with 9K deaths

womensrisksrepresenttheapproximatecohortof

thosewomenwhobegansmokingearlyinlifeand

continuedsmoking

through

middle

age

(unlike

earlier

CPS2cohortdoneinthe1980s).

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THE MILLION WOMEN STUDY

All-cause mortalityEx-smokers and current

smokers

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Over 1.3 million (M) quittersin Canada, 1999-2009 age

CGHR.ORG Source: Jha et al, forthcoming


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Main causes of trendsin recent decades

Lun : smokin

Colorectal: treatment

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Stomach: Unknown


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GATS1 (orange) in 14 countries, B,R,I,C, + 10 otherLMICs

, , .


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, , .


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GATS+US+UK: 16 countries, 4B population, 2.3B age


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GATS+US+UK: 16 countries, 4B population, 2.3B age

Of 2.3B age


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Year Ci arettes Year Ci arettesper day per day

1910 1 1952 1

1930 4 1972 4

1950 10 1992 10

CGHR.ORG 1990 33% 2030 ~33%


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China is the largest cigarette

pro ucer

CGHR.ORG2012-6-15 23


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30 year old smokers *

Men who smoke ci arettes 10 ears

* -

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, ,

(note that currently, few females smoke cigarettes)

Source: Jha et al, NEJM, Feb 2008


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CGHR.ORG Source: Jha et al, NEJM, Feb 2008


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Deaths from smoking in year 2010 in

n a, ages - , y sease

Disease Total deaths: 2.0 M Total deaths:2.9 M% all % all

No. deaths) No. deaths)

Respiratory disease 26,000 10 109,000 31Tuberculosis 14,000 9 120,000 38

Heart disease/stroke 13,000 3 152,000 20

, ,TOTAL, all diseases 93,000 5 579,000 20



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Cigarette displacing bidis

35%

40%Cigarettes

Bidis 1.00(0.87-1.14)

0.74 *(0.69-0.79)

0.85 *(0.78-0.92)

ASRGATS / ASRSFMS

lence 30% 1998 2010

1998 2010

(99% CI)

* Indicates p-value < 0.01 0.83 *(0.79-0.87)

okingprev

20%

2010

*

1.59 *(1.41-1.79)

1.66 *(1.43-1.93)

1998

2010

1.94

*(1.77-2.12)

Sm

10%

15%

20101998

2010

1998

2010

1998

2010

2010

.(1.42-2.51)

3.46(2.71-4.43)

0.93(0.80-1.08)

2010

0%

5%1998

1998

1998

CGHR.ORG

15 29 30 44 45 59 60 69

Age groupAbsolute numberof smokers

15 69


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Bidi and cigarettes are more

AffordabilityofTobaccoProducts,19902011300.0

250.0

Bidi

Cigarette

200.0

=10

0

150.0

1

9

9

100.0

CGHR.ORG

.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year


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Copenhagen Consensus: 15-20 challenge

papers on roa eve opment top cs Each paper estimates costs and benefits of

spec c n erven ons Panel of economists, judging best buys for

CC12- Analytic team on chronic disease used

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Economic costs of tobacco,

-, -

Region/Disease Vascular CancerChronicLung Total

Total due totobacco

Low andmiddle

High income 7 3 3 13 6

World GDP about $63 tril lion, thus, about 1.3% of GDP on annual basis, or roughly $0.9tril lion in 2010 terms

CGHR.ORG

* Method: labour and capitol impact on lost output, using WHO EPIC model and % duetobacco

Source: Jha, Bloom et al, for CC12, 2012


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Technology + diffusion have reduced marginalcosts for maximal child survival. But mar inal

$400)

costs for maximal adult survival are rising

$300

capita($20

05,

PP

Adult male 15-59

$200

GDPper -

$100

Child


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Cost-benefit returns from

BenefitCost

AnnualCosts Annual Benefits

Priority Area Ratio ($billions) (M=millions)

1. Tobacco taxation 40:1 0.5 1 M deaths averted or 20 MDALYs

2. Acute management ofheart attacks with low-

cost drugs

25:1 0.2 0. 3 M deaths averted eachyear or 4.5 M DALYs

3. Salt reduction 20:1 1 1 M deaths averted or 20 MDALYs

4. Hepatitis B 10:1 0.1 0. 15 M deaths avertedmmun za on or vercancer or cirrhosis

eac year or s

5. Secondary prevention 3:1 32 1.6 M deathsaverted or 108

CGHR.ORG

strokes with generic

risk pill

Ad S ith


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Adam Smith on

tobacco tax

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Source: An Inquiry into the Nature and Causes of The

Wealth of Nations, Book V, Chapter III, pages 474-476,

1776;

F 1980 2005 i i i l d


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France 1980-2005: cigarette prices tripled,

consum tion halved tax revenue doubled6.0

# cigarettes/adult/day

4.5

5.0

5.5

eathrate

2501980)

3.5

4.0

t/d

ayand

200

relativeto

2.0

2.5

.

mber/adul

100

150

Price(%

Relative price

1.0

1.5

1980 1985 1990 1995 2000 2005 2010

N

u

50

CGHR.ORG

Year

Source Jha 2009, Hill 2010


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F 1980 2005 i tt i t i l d


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France 1980-2005: cigarette prices tripled,

consum tion halved tax revenue doubledGovernment income from tobacco,14

10

12

8

,2007euros

4

6

Billion

2

CGHR.ORG

0

1960 1970 1980 1990 2000 2010

Tax structure: importance


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Tax structure: importance

CGHR.ORG Source: Chaloupka, et al, 2010, WHO, 2010


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Obstacles raised to higher

tobacco taxes Taxes hurt the oor:

Poor are more price responsive and health gains are

progressive Smu lin :

Consumption falls and revenues rise despite smuggling Crack down on criminal activity not lower tax rates

Job loss small manufacturing base in most countries, and small (and

shrinking farmers) Money not spent on tobacco is spent on other goods/services

genera ng o er o s

Revenue loss: revenue rises even with large one-time increases, and from

CGHR.ORG

g o g er eve s

Risk of dying from all causes


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Risk of dying from all causes

60

rs(%) men, Canada ages 35-69 years

4035-69

yea

20

30

g

atages

3936

33

29 28

19 17 14 11 10 9 8 7

10

iskofdyi

2325

2024 20

18 16

0

1986

1991

1996

2001

1986

1991

1996

2001

1986

1991

1996

2001

R

CGHR.ORGCGHR.ORG

Low Middle High

Neighborhood income quintileSource: Singhal, Jha et al, in press

Who Pays & Who Benefits


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Who Pays & Who BenefitsImpact of Federal Tax Increase, U.S., 2009

67%70%

e =s are o ncome, ue=s are o re uce ea s

46%50%

60%

30%

40%

12%

20%

0%

10%

CGHR.ORG

2*povertylineSource: Chaloupka et al., in progress; assumes higher income smokers smoke more expensive brands


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Tax and health burdens by SES: Methods

Collected data on price elasticity, cigarette prevalence and

consumption, adult and youth population, and cigarette price and

Separate models for local elasticities (country-specific) anduniversal elasticities (averaged at -0.4; ratio of universal

e as c es across wea groups ma c e a o oca

elasticities)

Used a tiered price and tax structure (higher prices and tax ratesin wealthier groups) when data were available

Assumed smoking death rate of 1/3 for youth, (1/3)*(.6875)=0.23

for adults

Simulated effect of 25% increase in cigarette retail price on totaltaxes paid and number of smoking deaths

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Phili ines - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group

Low SES group:Pays 7.0% of increased taxes

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ece ves . o ea ene sHealth/tax ratio: 4.80


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India - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group


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Thailand - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group

Low SES group:Pa s 7.4% of increased taxes

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Receives 58.1% of health benefitsHealth/tax ratio: 7.85


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Vietnam - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group


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Turke - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group


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. Health/tax ratio: 2.35


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US - LOCAL elasticitiesDistribution of marginal taxes and health benefits by SES group


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Tobacco taxes and revenues


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Tobacco taxes and revenuesn at on uste garette axes an

Cigarette Tax Revenues, Indonesia, 1979-2001

CGHR.ORG Source: Djutaharta, et al., 2005

Canada Sharply Reduced


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Canada Sharply Reduced

Tax

axes n

reduced in

an attemptto counter

10

12

D) 80

90

100

ionper

smugg ng

I

V

6

8

erpack(U

50

60

70

c

onsumpt

(inpacks)

4

Realprice

20

30

40

alcigarett

capita

-1

1989

1990

1991

1992

1993

1994

19950

10 An

n

CGHR.ORG

Sources: Joossens, et al., 2000; Merriman, et al., 2000

Source: World Bank, 2003

Real Price Consumption

Sweden Reduced CigaretteSweden Reduced Cigarette


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Sweden Reduced CigaretteSweden Reduced Cigarette

xe yxe yCigarette Tax Revenue and

Consumption in Sweden, 1970-1998

7000

70

80

4000

5000

SK 50

60

ap

ita

2000

3000

Millio

20

30pac

k/

0

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

0

10

CGHR.ORGSource: World Bank, 2003

TaxesMillion SKE cigarette/pack

Wh t ld BAT ?


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What would BAT say?No company can increase its prices significantly without taking the risk of

promoting illicit trade and evasion. A heavy tax burden could have effects

that are o osite to those ex ected difficult to revert and with no doubt

very harmful for the country (Page 39 of WITCO annual report)

Select Committee on Health of the House of Commons, London on 16February 2000, found:

Support for criminal activity is endemic among BAT senior managers

BAT has provided support to narcotics traffickers and other organisedcr me ano er s u y oun a n o error s s

BAT has obstructed investigations into its involvement in tax evasion

and smuggling

companies A criminal investigation should start in the United Kingdom

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http://www.guardian.co.uk/bat

C b ti illi it t d


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Combating illicit trade

Decrease smuggling activities by 5.4%

Reduce global consumption by 2.3%

Increase governments tax revenues by 7.8% despite 4% totaltax revenue lost due to smuggling

new best practices

which reduced share of smuggled

ci arettes from estimated 15% in 1995 to 5% in 1999 Focus on large scale, container smuggling

Strengthened tax administration with new technology and betterenforcement

Collaboration with France, Andorra, Ireland, UK and the EU Anti-

Fraud Office Did NOT focus on individual tax avoidance, street sellers

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Source: Yarely & Sayings 2006, Yurekil, 2010

Act ing to raise taxes


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Act ing t o raise t axes

Epidemiological estimates on hazards of tobaccoand benefits of cessation

Technical analyses on taxes and structure oftaxes

ocumen an repor e ax s ra egy o etobacco industry

MinistriesPolic and technical briefs workin rou s

Engage at political level- Prime Ministers, FinanceMinisters and politicians

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The 1 pager

Civil society- eg Mexico protests

M i 7 25% t i 2010


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Mexico: 7 eso 25% tax rise 2010GOAL: 10 peso hike

Good epidemiologic analyses Mexico: ~11 M smokers so 4-6 M will die from smoking unless

they quit Price elasticities and poverty analyses ,

decreasing consumption, no major smuggling

International seminar with MoF:

Political visiblity Senator Saro rgan ze protests on steps o o Slogan: 10 pesos for 1 million lives saved

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soft earmarking- more money focused on poverty reduction

CONCLUSI ONS:


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CONCLUSI ONS:

ct ons t o save at east ves Take tobacco seriously: big cause of death and big

Focus on adults stopping as well as kids

retail price, get at least 30% of current smokers to

quit (and prevent kids from starting), and raisemore tax revenue Know and refute objections to higher tax: (i) harms

e poor- ea ga ns are pro-poor an ax ur enon the poor might not increase; (ii) smuggling-

CGHR.ORG

, ,and coordination

Source: Jha, et al EPW

death and taxes by dr. prabhat jha, cghr/university of toronto

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