Estimating the economic consequences of substance use and substance use disorders

INTRODUCTION

This contribution gives an overview on estimating the economic impact of substance use (SU) and substance use disorders (SUDs) from a societal perspective.

AREAS COVERED

In this Expert Review, we first discuss the scope of the economic costs of SU to society and the methods used to estimate them. In general, cost studies should not be limited to SUDs, but should also include costs related to the consequences of any type of SU to achieve a comprehensive picture of the societal burden. Further, estimating potentially avoidable costs will increase the value of cost studies. Importantly, methodologically sound cost studies shed light on the magnitude of societal problems related to SU and can be used as a reference point to evaluate regulatory policies and other preventive measures. The area of estimating potential economic benefits of SU is understudied and lacks a theoretical and methodological framework.

EXPERT OPINION

Overall, economic studies on the impact of SU and SUDs can strongly contribute to better-informed decision-making in the creation of regulatory and control policies. The least developed area of research refers to a consensus methodology that could be used in studies which compare economic costs to potential economic benefits.

Classifying Alcohol Control Policies with Respect to Expected Changes in Consumption and Alcohol-Attributable Harm: The Example of Lithuania, 2000-2019

Due to the high levels of alcohol use, alcohol-attributable mortality and burden of disease, and detrimental drinking patterns, Lithuania implemented a series of alcohol control policies within a relatively short period of time, between 2008 and 2019. Based on their expected impact on alcohol consumption and alcohol-attributable harm, as well as their target population, these policies have been classified using a set of objective criteria and expert opinion. The classification criteria included: positive vs. negative outcomes, mainly immediate vs. delayed outcomes, and general population vs. specific group outcomes. The judgement of the alcohol policy experts converged on the objective criteria, and, as a result, two tiers of intervention were identified: Tier 1—highly effective general population interventions with an anticipated immediate impact; Tier 2—other interventions aimed at the general population. In addition, interventions directed at specific populations were identified. This adaptable methodological approach to alcohol control policy classification is intended to provide guidance and support for the evaluation of alcohol policies elsewhere, to lay the foundation for the critical assessment of the policies to improve health and increase life expectancy, and to reduce crime and violence.

Causes of the Obesity Epidemic and Economic Rationales to Support Taxation as a Population-based Policy Response

This article examines the diverse and sometimes debatable underpinning causes of the growing obesity epidemic both in Australia and globally in order to provide a background that supports and legitimises the implementation of population-based strategies to address the associated negative impacts for both individuals and broader society. Particular focus is given to the consumption of Highly Processed Foods, and Sweetened Sugary Beverages, and the impact that the over-consumption of these products has on obesity and overweight issues. In order to address and mitigate against the negative consequences that emanate from the consumption of such products for both individuals and for broader society, taxation, as one population-based initiative that policymakers can implement is explored by reference to economic based theories. These include the Consumer Choice Constraint Theory, the Indifference Curve approach and the Pigouvian Theory of taxation. These economic theories provide a supportive basis upon which policymakers can effectively implement such an approach.

Macroeconomic policies and the pandemic-driven recession

We build a three-country DSGE model to address the economic fallout from the COVID-19 shock. First, three different scenarios –optimistic, baseline and pessimistic– are drawn where economic authorities are assumed to not react to the disturbance. We find that the pandemic brings about a prolonged economic depression in the latter scenario –the most realistic one–, as GDP and hours worked fall by 20% (from trend) and they never recover their pre-crisis levels over the span of time studied. We then move on to analyze the effectiveness of conventional fiscal and monetary policy tools in curbing the recessionary consequences of the pandemic. The most powerful instruments are government purchases and expansionary monetary policy, although these two measures come with some trade-offs. In addition, we explore how a binding zero lower bound (ZLB) that renders conventional monetary policy ineffective can affect our findings. We show that the lower constraint deepens the recession caused by the pandemic, primarily because the central bank cannot lower the policy rate further, and because fiscal policy tightens in order to ensure government debt sustainability. Naturally, we next ask ourselves what would happen in this context did the monetary authority rely on unconventional monetary policy to try to dampen the recessionary consequences of the pandemic. Our results reveal that quantitative easing (QE) prevents private consumption, inflation, and to a much lesser extent, output from falling as much due to the shock.

Measuring the illicit cigarette market in the absence of pack security features: a case study of South Africa

There are several ways to measure the illicit cigarette market. In South Africa, different methods were used to triangulate results. The aim of this paper is to assist researchers to decide which method is most suitable to their context, especially for countries that do not have security features on cigarette packs (eg, tax stamps). We analysed the methods and results from three published articles that used various approaches to measure cigarette illicit trade in South Africa: (1) gap analysis, (2) price threshold method using secondary data from a national survey, and (3) price threshold method using primary data collected in low socioeconomic areas. We provide methodological insights and background information. We discuss the advantages and disadvantages of each method. The method chosen by researchers will depend on data availability, the existence or absence of security features on cigarette packs and funding. Researchers investigating illicit trade should use more than one method to increase confidence in the obtained results.

What proportion of the price of a typical alcoholic beverage is taxation in Canada and why does it matter?

INTRODUCTION

Canadian distillers and brewers have claimed that between 50% and 80% of the price of alcoholic drinks are government taxes. These claims were made in campaigns to decrease alcohol taxation.

METHODS

We investigated these claims using publicly available Statistics Canada data and provincial-level product sales data and breakdowns of the prices of typical alcohol beverages in major market sectors.

RESULTS

In all cases, the rate of total sales tax and excise taxation are mostly between 20% and 30% of final retail prices, well below the industry claims.

Potential revenue from taxing e-cigarettes and comparison of annual costs of daily e-cigarette use versus daily cigarette smoking among South African adults

INTRODUCTION

To inform policy making under the proposed The Control of Tobacco and Electronic Delivery Systems Bill, we compared annual costs of using e-cigarettes versus cigarettes, and estimated revenue from e-cigarette taxation.

METHODS

We extracted e-cigarette retail prices from 231 South African e-cigarette vendor websites. We compared annual costs associated with daily cigarette smoking (self-reports from daily smokers in the 2018 South African Social Attitudes Survey, SASAS) versus daily e-cigarette use (based on cumulative costs of consumables plus device costs). We estimated revenue from excise tax if e-cigarettes were taxed at 75% (the rate proposed by the government) and 37.5% (half of the government’s proposal as a hypothetical scenario) of the cigarette excise rate. We applied the different rates to e-cigarette consumption in 2018 SASAS and projected for 2021.

RESULTS

Mean annual cost associated with daily use was ZAR 6693 (US$460.32, based on an exchange rate of about 69 US$ to 1000 ZAR) for manufactured cigarettes; for e-cigarettes, this ranged from ZAR 8574.69/year (with price minimizing strategies) to ZAR 19780.83/year (retail products exclusively). Expected revenue from e-cigarette excise tax at 75% of the cigarette tax rate was up to ZAR 2.20 billion (95% CI: 0.96–3.44). If taxed at 37.5% of the cigarette tax rate – half of the government’s proposed rate – the projected revenue was up to ZAR 1.10 billion (95% CI: 0.48–1.72). Of the projected revenue from e-cigarette excise tax at 75% of the cigarette rate, the portion attributable to hardware (device and batteries) was 61% (ZAR 1.35 billion), while the portion attributable to e-liquid was 39% (ZAR 0.86 billion).

CONCLUSIONS

Calculated daily costs were higher for e-cigarettes than cigarettes. We recommend an e-cigarette excise tax. The government’s proposed tax rate may reduce youth e-cigarette access, while allowing adult smokers wishing to switch exclusively to e-cigarettes to reduce their tobacco-related harm.

Public support for cigarette price increase in Indonesia

BACKGROUND

The current tobacco control policies in Indonesia are known to be ineffective in reducing tobacco consumption. Therefore, increasing cigarette prices is one of the effective instruments that should be supported by governments and society. This study aims to assess public support for cigarette price increases as well as to generate scientific evidence for the government and policymakers.

METHOD

This cross-sectional survey obtained data through telephone interviews with 1000 respondents aged ≥18 years old in Indonesia. The interviews started from 1 May 2018 to 31 May 2018.

RESULT

Respondents were varied in terms of age, gender, level of education, income, occupation, area of living and smoking status. This study found that 87.9% of the respondents including 80% of smokers support cigarette price increase to prevent children from buying cigarettes. Approximately 74.0% of smokers said they would stop smoking if cigarette prices were Rp70 000 (US$5) per package. The multivariate analysis revealed that age, income, money spent on cigarettes per day and the perception of current cigarette prices are the factors influencing support for higher cigarette prices.

CONCLUSION

The increase in cigarette prices is supported by society at large, including active smokers. The government must consistently adjust cigarette prices through an excise taxing and cigarette retail price mechanism. Governments, academicians, non-governmental organisations and tobacco control activists should generate a unified understanding that increasing cigarette prices will improve overall life quality.

Revisiting the tax treatment of bidis in India

Background

Bidi use remains an intractable public health problem for India. This is partly due to the informal nature of the bidi supply chain, including tax exemptions for small producers. The aim of this paper is to assess the impact of making all bidis subject to duty and Goods and Services Tax. Although this may require legislative changes and incur some extra administrative costs, the net benefits would include greater oversight of the supply chain as well as increased tax revenues and reduced consumption.

Methods

We use a form of gap analysis (the difference between duty paid and total bidi consumption) to estimate the number of tax-exempt bidis. We then use local evidence on the price elasticity of demand for bidis to assess the impact of eliminating these exemptions on the price and consumption of presently tax-exempt bidis.

Findings

Total bidi consumption is estimated at 400 billion sticks per annum, including 275 billion duty paid sticks and 125 billion duty exempt sticks. Removing the small producer exemptions would increase the price of currently exempt bidis by INR4.6/pack. Total bidi consumption would decrease by 6% and the number of smokers would decrease by 2.2 million adults. This would bring the rate of bidi smoking down from 7.7% to 7.5%, while generating INR14.8 billion in tax revenues.

Conclusions

Eliminating India’s tax exemptions for small bidis producers would make a significant contribution to tobacco control, both directly by reducing the number of smokers and indirectly by plugging a loophole in the supply chain.

Tobacco industry tactics in response to cigarette excise tax increases in Mauritius

BACKGROUND

In response to high smoking rates, especially among men, Mauritius launched a National Action Plan on Tobacco Control in 2008. It changed its tax system from a mixed system to a uniform specific system. Despite these interventions, cigarette consumption and smoking prevalence in Mauritius decreased only marginally in the subsequent decade.

METHOD

Using publicly available data, we decompose the retail price of cigarettes into tax and net-of-tax components, between 2011 and 2017. We cover premium, popular and economy cigarettes.

RESULTS

Since its introduction in 2008, the nominal excise tax was increased six times. Between 2011 and 2017, the real value of the excise tax increased by 47%. Meanwhile, British American Tobacco (BAT) increased the real net-of-tax price of premium cigarettes by 61.8% and of popular cigarettes by 47.2%, thus overshifting the tax increase. On economy cigarettes, BAT decreased the real net-of-tax price by 14.7%, thus undershifting the excise tax increase.

CONCLUSION

Through its pricing strategy, BAT has greatly undermined Mauritius's tobacco control policy. However, BAT cannot continue undershifting the excise tax on economy brands, since the net-of-tax proportion of the retail price is very low already. BAT would have little choice but to increase the retail price on economy brands in response to future excise tax increases. The government of Mauritius is encouraged to keep the specific excise tax structure but to increase the rate at which it is levied.

Alcohol Control Policy in Europe: Overview and Exemplary Countries

Alcohol is a major risk factor for burden of disease. However, there are known effective and cost-effective alcohol control policies that could reduce this burden. Based on reviews, international documents, and contributions to this special issue of International Journal of Environmental Research and Public Health (IJERPH), this article gives an overview of the implementation of such policies in the World Health Organization (WHO) European Region, and of best practices. Overall, there is a great deal of variability in the policies implemented between countries, but two countries, the Russian Federation and Lithuania, have both recently implemented significant increases in alcohol taxation, imposed restrictions on alcohol availability, and imposed bans on the marketing and advertising of alcohol within short time spans. Both countries subsequently saw significant decreases in consumption and all-cause mortality. Adopting the alcohol control policies of these best-practice countries should be considered by other countries. Current challenges for all countries include cross-border shopping, the impact from recent internet-based marketing practices, and international treaties.

Potential impact of eliminating illicit trade in cigarettes: a demand-side perspective

BACKGROUND

The Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) entered into force in September 2018, and commits Parties to implement a package of measures to combat this global problem. The aim of this study is to assess the potential impact of eliminating illicit cigarettes on consumption, use and tax revenues.

METHODS

We identified 36 countries where an independent (non-industry sponsored) study of the illicit cigarette market was available. We developed a conceptual framework for describing how the elimination of illicit cigarettes might impact on demand (consumption and use) and applied this framework to our sample of countries to assess the impact of eliminating illicit cigarettes across different settings.

FINDINGS

Illicit cigarettes account on average for 11.2% of the market in these 36 countries. The elimination of illicit cigarettes would reduce total cigarette consumption by 1.9% across these countries. The decrease in 'group A' countries-where illicit cigarettes are >15% of the market-would average 4.1%. The smoking rate would decrease by 1.0% in relative terms including by 2.2% in group A countries. Tax revenues from the legal sale of cigarettes would increase by 11.2% including by 25.1% in group A countries.

CONCLUSIONS

The illicit cigarette market reflects a complex interplay between supply and demand, with an array of different country conditions. Regardless of the situation, our study highlights the contribution that the elimination of illicit trade can make to tobacco control through demand reduction while at the same time generating significant tax revenues.

Impact of a recent tobacco tax reform in Argentina

The literature on policies for the control of the tobacco epidemic suggests that increasing excise taxes on the consumption of tobacco products is the most cost-effective policy. Cigarette tax structure in Argentina is very complex. All the tax bases for cigarette consumption taxes are related and, therefore, any modification of a tax affects the collection of the rest of the taxes. This is important given that funds raised by one of the taxes, the Special Tobacco Fund (FET), are allocated among the tobacco provinces according to the value of tobacco production. These provinces oppose in the congress to any reform that increase taxes on cigarette consumption that negatively affects these funds. In May 2016, the government decided to increase the rate of one of the taxes, the internal tax, from 60% to 75%. We study the impact on cigarettes' demand price elasticity, consumption and tax revenues of this tobacco tax reform. Using an Error Correction Model, we estimate short-run and long-run demand price and income elasticities. We find that the tax reform of May 2016 induced an increase in the magnitude, in absolute value, of the short-run demand price elasticity and at the same time increased the funds collected by the FET. We simulate the effects of the tax reform over the government revenues and per-capita consumption of cigarettes showing that additional increments in taxes would increase revenues and diminish consumption of cigarettes.

Accelerating progress on effective tobacco tax policies in Montenegro

BACKGROUND

The objective of this study is to estimate the sensitivity of cigarette quantity demanded to price and income changes in Montenegro.

DATA AND METHODS

The sensitivity of cigarette quantity demanded to price and income changes was estimated using micro and macro analysis. Micro analysis implied the use of Deaton's model on Household Budget Survey data (2006-2017). In macro analysis, conventional static demand model is applied using error correction and autoregressive distributed lag time series methodology on annual time series aggregated data (2001-2017).

RESULTS

The same results were obtained using micro and macro analysis which contributes to the objectivity of the conducted research. Results derived from the Deaton's model indicate a negative price elasticity of cigarettes in the range between -0.62 and -0.80 (conditional and unconditional), while in macro model estimated price elasticity is in that range and equals -0.68. Simulation results confirm the efficiency of excise tax policy changes, having an evident decrease in consumption and increase of public revenues.

CONCLUSION

Analysis of the tobacco market and regulatory environment suggests that the increase of excise and other taxes on tobacco have an important direct impact on the reduction of cigarettes and other tobacco products consumption. Our estimates of long and short-run price elasticity show that direct impact is strong and very much in accordance with the results obtained so far for other low-income and middle-income countries. This paper gives a contribution to the analysis of price elasticity of demand for cigarettes, which was for the first time conducted in Montenegro.

COVID-19 Blunts Alberta Challenge to Federal-Provincial Income Tax

Stephen Harper proposed an Alberta personal income tax (PIT) modelled on Quebec's separate PIT in 2001. The Alberta government rejected this proposal because of cost concerns. In 2019, Premier Kenney twinned the Alberta PIT plan with Quebec's request for provinces to collect federal PIT and asked an expert panel for a report. In June 2020, Alberta accepted the Fair Deal Panel's recommendation to support Quebec while admitting that a separate Alberta PIT requires significant further analysis. The fiscal impact of the coronavirus disease 2019 crisis may explain Alberta's relatively cautious approach. An Alberta PIT may now be affordable only if the federal government covers provincial administration costs. The crisis also highlights the value of a cash flow advantage for provinces from federal PIT collection, thereby further reducing the appeal of an Alberta PIT.

Impact of tax increases on illicit cigarette trade in Mongolia

BACKGROUND

The Mongolian government increased import tobacco tax by 30% in May 2017 and excise tobacco tax by 10% in January 2018. To assess the impact of these tax increases on illicit cigarette trade, we estimate illicit trade before and after tax increases.

METHODS

Discarded cigarette packs were collected in the capital city and in two provinces near China, the Russian Federation and Kazakhstan. Tax increases occurred between all three rounds (April 2017, August/September 2017, May/June 2018). Cigarette packs are identified as illicit if there is evidence that tax was not paid. This is deduced from the absence of the Mongolian excise tax stamp, or the absence of traces of a tax stamp (glue residue). Data are weighted to represent the areas sampled.

RESULTS

In round 1, 15.4% (95% CI 14.6% to 16.2%) of the 7494 collected packs were illicit. This estimate decreased to 13.6% (95% CI 12.7% to 14.5%) in round 2 (5852 collected packs) and to 6.3% (95% CI 5.7% to 6.9%) in round 3 (6258 collected packs). Illicit cigarettes originated primarily from the Republic of Korea and Ukraine, but some were manufactured in Mongolia. While the majority of illicit products are supplied by global companies (Korea Tobacco & Ginseng, Imperial Tobacco and Philip Morris Kazakhstan), one local company, Mongol Tobacco SO, is also implicated.

CONCLUSIONS

The share of illicit cigarettes declined between rounds 1 and 2 despite the import tax increase, and this trend continued in round 3 despite the excise tax increase.

Tobacco excise tax increase and illicit cigarette consumption: evidence from Vietnam

BACKGROUND

One of the most significant barriers to tax reform and tax rate increases in Vietnam is the threat of illicit trade promulgated by the tobacco industry. The industry argues that higher taxes will stimulate smuggling, thereby undermining tax policy objectives and impairing the domestic tobacco manufacturing. Unfortunately, there is a dearth of updated and independent studies to verify this claim and inform the tax reform in the country.

OBJECTIVES

The present paper attempts to generate new estimates of the illicit consumption and compare them to a prior study to ascertain the changes in the levels of the illicit trade after a tobacco excise tax increase.

METHODS

The study uses primary data collected from the Tobacco Consumption Survey in late 2017. It is a multistage cluster random household survey, covering a sample size of over 2700 smokers, and purposively designed to make its results comparable to prior estimates, which have been done before the tax increase. Particularly, we collect packs from selected smokers and perform careful inspection to identify the prevalence of illicit products. In addition to the consumption, we collect data on brand choices, cigarette prices, the types of stores that the smokers bought their cigarettes, as well as their socioeconomic characteristics. They allow us to determine the regional variation of the illicit trade, identify the main illicit cigarette brands, compare the prices of the licit and illicit cigarettes, and examine the main sources of the illicit cigarettes. Incomes of the licit and illicit cigarette smokers are also compared.

RESULTS

Contrary to the tobacco industry's predictions, our estimates demonstrate that the level of the illicit trade declined even after the increase of taxes imposed on tobacco products in Vietnam. The illicit cigarettes account for only about 13.72% of the total cigarette consumption in Vietnam in 2017, lower than the 20.7% estimate in 2012 done by the previous study. The illicit cigarettes are heavily concentrated in the southern provinces of Vietnam bordering Cambodia, and locally accessible to the smokers from grocery stores. Jet and Hero are the two most popular brands, representing over 80% of total illicit consumption in the country. Interestingly, the illicit cigarettes are on average more expensive than the illicit products in Vietnam, unlike many other countries where the former are typically cheaper than the latter. Consequently, as is to be expected, the illicit cigarette smokers tend to earn higher incomes than those smoking the licit products.

CONCLUSIONS

Raising the taxes levied on tobacco does not necessarily cause higher illicit consumption in Vietnam as widely stated by the tobacco industry. The Government of Vietnam should recognise the tobacco tax policy as the most effective and cost-effective tobacco control measure and establish a clear road map of progressive tobacco excise tax increases so that total tax levied on tobacco accounts for at least 75% of retail price as suggested by the WHO to reduce smoking prevalence in the country.

Smoke signals: monitoring illicit cigarettes and smoking behaviour in Colombia to support tobacco taxes

BACKGROUND

A street cross-sectional survey in 2016 with a representative sample of 1697 smokers in five Colombian cities was used to estimate the penetration of illicit cigarettes (PIC). The first wave was collected 3 months before a 100% increase in tobacco excise tax, and a second wave collected data 9 months after tax reform was effective. OBJECTIVE : Analyse changes after a cigarette tax increase in PIC, prices and smoking behaviour patterns for five Colombian cities (63% of the market). Smoking behaviour includes consumption intensity, presentation (stick/pack) and place of purchase. METHODS : Repeated street cross-sectional survey with smokers' self-report on smoking behaviour, last purchase information and direct observation of smokers' packs. Sampling frame: smokers, men and women, aged 12 years or older, all income levels, resident in the five cities with the highest number of smokers representing 63% of cigarette market share (Bogotá, Medellín, Cali, Cartagena and Cúcuta) with 1 733 316 smokers in 2013. Sample size was 1697 per wave, with confidence level 95%, margin of error 3.5% for Bogotá and Medellín and 5% for the other three cities. Smokers in second wave match first wave's location, sex and age group. Illicit cigarettes were identified based on brand, health warnings and price. RESULTS : After the tax hike, the average real price of a 20-stick pack increased by 28.2% and by 23.1% for loose cigarettes. Illicit cigarettes represented 3.4% of total cigarette consumption in 2016 and increased to 6.4% in 2017, lower than the current industry estimate of 18%. Consumption intensity decreased: the proportion of heavy smokers (more than 10 cigarettes per day) wentdown from 37% in 2016 to 26% in 2017.

CONCLUSION

After the tax increase, Colombia's PIC remained at low levels, and there is enough space for new tobacco tax hikes.

Illicit tobacco trade in Georgia: prevalence and perceptions

BACKGROUND

In lower-income and middle-income countries, limited research exists on illicit tobacco trade and its responsiveness to taxation. Tobacco taxes are critical in reducing tobacco consumption, thereby improving public health. However, the tobacco industry claims that tax increases will increase illicit tobacco trade. Therefore, research evidence on the size of the illicit cigarette market is needed in Georgia and other low-income and middle-income countries to inform tobacco tax policies.

METHODS

In 2017, a household survey using stratified multistage sampling was conducted in Georgia with 2997 smokers, to assess illicit tobacco consumption. Smokers were asked to show available cigarette packs to the surveyors. These were examined for tax stamps and health warnings which allowed for an assessment of illegal cigarette consumption in Georgia.

FINDINGS

The packs shown to surveyors suggest illicit cigarette trade is low (1.5%), although with regional differences, as illicit cigarette packs were present in 6% of the households in Zugdidi. Most illicit cigarettes were purchased at kiosks or informal outlets. This estimate might be conservative, as 28% of respondents did not show any packs to the surveyors.

CONCLUSIONS

Despite recent tobacco tax increases, illicit cigarette trade in Georgia seems to be negligible. The market is more vulnerable to illicit cigarette trade close to the border with Abkhazia (near Zugdidi). Tighter control or ban of tobacco sales at kiosks and informal outlets may reduce illicit cigarette trade. Further investigation is planned to better understand why a large proportion of survey participants said they had no pack available at home.

Price elasticity of demand for cigarettes in Bosnia and Herzegovina: microdata analysis

BACKGROUND

Bosnia and Herzegovina (B&H) is among the top 10 countries in the world in terms of number of smokers. The cigarette prices in B&H are under a direct impact of state excise tax policy. The specific excise on cigarettes was introduced in B&H in 2009. Since then it has been increasing every year thus being the main driver of cigarette prices growth.

METHODS

In this paper we estimate price elasticity of demand for cigarettes following Deaton demand model and apply it on microdata obtained from the Household Budget Surveys in B&H conducted in 2011 and 2015. Deaton model uses within-cluster information to estimate total expenditure elasticities and then uses between-cluster information to estimate price elasticities. For B&H, the cluster is defined as a municipality × in the year t. Our sample contains 14 252 households, divided into 267 clusters.

RESULTS

Our results show that the price elasticity is statistically significant and amounts to -1.366. This means that if cigarette prices in B&H are increased by 10%, the demand for cigarettes would decrease by 13.66%.

CONCLUSIONS

We found a negative price elasticity of demand for cigarettes of -1.366. These results of the econometric estimate of elasticity of demand are more elastic compared with the results of similar surveys carried out on the sample of low and middle-income countries. It demonstrates that the demand for cigarettes responds strongly to the price increase.

Impact of interventions to reduce overnutrition on healthcare costs related to obesity and type 2 diabetes: a systematic review

CONTEXT

In recent decades, obesity and type 2 diabetes mellitus (T2DM) have both become global epidemics associated with substantial healthcare needs and costs.

OBJECTIVE

The aim of this review was to critically assess nutritional interventions for their impact on healthcare costs to community-dwelling individuals regarding T2DM or obesity or both, specifically using CHEERS (Consolidated Health Economic Evaluation Reporting Standards) criteria to assess the economic components of the evidence.

DATA SOURCES

Searches were executed in Embase, EconLit, AgEcon, PubMed, and Web of Science databases.

STUDY SELECTION

Studies were included if they had a nutritional perspective, reported an economic evaluation that included healthcare costs, and focused on obesity or T2DM or both. Studies were excluded if they examined clinical nutritional preparations, dietary supplements, industrially modified dietary components, micronutrient deficiencies, or undernutrition; if they did not report the isolated impact of nutrition in complex or lifestyle interventions; or if they were conducted in animals or attempted to transfer findings from animals to humans.

DATA EXTRACTION

A systematic review was performed according to PRISMA guidelines. Using predefined search terms, 21 studies evaluating food habit interventions or taxation of unhealthy foods and beverages were extracted and evaluated using CHEERS criteria.

RESULTS

Overall, these studies showed that nutrition interventions and taxation approaches could lead to cost savings and improved health outcomes when compared with current practice. All of the included studies used external sources and economic modeling or risk estimations with population-attributable risks to calculate economic outcomes.

CONCLUSIONS

Most evidence supported taxation approaches. The effect of nutritional interventions has not been adequately assessed. Controlled studies to directly measure economic impacts are warranted.

Price and expenditure elasticity of cigarette demand in El Salvador: a household-level analysis and simulation of a tax increase

BACKGROUND

In El Salvador, 8.8% of adults 15 years and older smoke cigarettes. Little is known about the sensitivity of cigarette consumption among the adults in El Salvador to tax and price increases and income growth.

METHODS

Elasticities are estimated using Deaton's Almost Ideal Demand System model applied to data from the National Household Income and Expenditure Survey 2005/2006 for the total population and separately for income groups. The estimates are then used to simulate the effects of a proposed change in tobacco tax policy on cigarette consumption and tax revenue.

FINDINGS

The estimated price elasticities (-0.77 for the total population) are within the range of price elasticity estimates available for low and middle-income countries. Given the estimated elasticities, a tobacco tax increase is expected to reduce the number of smokers (by almost 20%) and increase tobacco tax revenue (by more than 50%).

CONCLUSIONS

Increasing tobacco taxes has the potential to decrease consumption in El Salvador and raise fiscal revenues. The tobacco tax burden in El Salvador is one of the lowest in Latin America and the social costs of tobacco consumption largely exceed the tobacco tax revenues. An increase in tobacco tax could significantly decrease the number of smokers and reduce the burden of tobacco-related diseases and deaths.

Key factors in achieving increased tobacco taxation: Experience from the island of Saint Helena

Concerted efforts by government officials and technical assistance from the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) Secretariat Knowledge Hub on Tobacco Taxation and Illicit Trade, resulted in an increase in tobacco taxation in Saint Helena during 2019. This formed part of a broader package of Tobacco Control measures to reduce the burden of noncommunicable diseases (NCD) on the island. We elaborate on key contextual and contributing factors that resulted in positive policy change in a relatively short period of time. These included political support for a strategic approach to address prevalent NCD in the context of an ageing population, high overseas health care costs and Overseas Development Aid dependency. Previous experience of impact from sugar-sweetened beverage taxation when combined with wider system measures, and the similar accompaniment of the tobacco taxation proposals with wider measures, encouraged policymakers to use tobacco taxation to curb cigarette consumption. These factors created readiness, and tailored technical assistance from an international, donor-funded partner and specifically modelling to provide evidence-based predictions of impact augmented confidence of policy benefit and enabled passage. This experience may serve as a point of reference for other countries that wish to implement similar policy changes.