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An Extended Cost-Effectiveness AnalysisThe Distributional Consequences of Increasing Tobacco Taxes on Colombia's Health and Finances
Authors: ---
Year: 2017 Publisher: Washington, D.C. : The World Bank,

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Abstract

Since 2008, when Colombia ratified the Framework Convention for Tobacco Control, available evidence of the impact of tobacco consumption, its health effects, and low tax revenues resulting from low tobacco taxation and prices had grown. By 2015, Colombia's cigarette prices stood higher than only one other country in the region, and smoking had become the second leading modifiable risk factor for premature mortality. At that time, reduced fiscal revenues resulting from a sharp drop in oil prices, accompanied by growing demand for government spending arising partly from a change in legislation that increased health benefits for the lower socioeconomic population, led to a call for tax reform. The preparation of the document was accompanied by technical training, studies, and public fora with national and international experts, civil society, and academia presenting evidences and arguing for increased taxation to lead to a reduction in tobacco consumption and, in the future, a reduction in costs to the health system. The fora and open dialogue helped align strategies of the Ministry of Health and Social Protection, and the Ministry of Finance in presenting the reform to Congress for approval with a larger academic and civil society support for this measure. In December 2016, resulting from the above-mentioned efforts, Colombia passed a major tax increase on tobacco products with the goal of decreasing smoking and improving population health. While tobacco taxes are known to be highly effective in reducing the prevalence of smoking, they are often criticized as being regressive in consumption. This analysis attempts to assess the distributional impact (across income quintiles) of the new tax on selected health and financial outcomes.


Book
The Political Economy of the 2016 Tobacco and Proposed Sugar-Sweetened Beverage Tax Increases in Colombia
Authors: ---
Year: 2017 Publisher: Washington, D.C. : The World Bank,

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Abstract

In 2008, Colombia joined the Framework Convention on Tobacco Control (FCTC), which includes measures related to price and taxes designed to reduce supply and demand. By 2015, the overall prevalence of smokers in the country had decreased slightly but still reached 17 percent. The impact of tobacco on the mortality and quality of life of Colombians was estimated as a direct loss of more than 600,000 years of life and more than 26,000 deaths each year. The price of cigarettes in Colombia in 2015 was so low (approximately 2 US dollars per pack of 20 cigarettes), that it was higher than just one other country in Latin America and in the Caribbean. At the time, Colombia was contending with shrinking oil revenue (owing to a sharp drop in oil prices) and constantly rising public expenditure. In the health sector cost pressures stemmed, among other factors, from a change in the government's responsibility for health coverage in the subsidized system that covers the cost of health services for the country's lowest population segments. It was in this context that the government in early 2015 created a committee of experts responsible for proposing changes in the country's tax structure. This document describes the course of events that led to the phased adjustment of the tobacco tax approved by Congress in December 2016, with a view to aligning the price of cigarettes in Colombia with the Latin American average. Despite the failed attempt to introduce a tax on sugar-sweetened beverages, the discussion was framed and will most likely be renewed in the future.

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