The introduction of tobacco excise taxation in the Gulf Cooperation Council Countries: a step in the right direction of advancing public health

BACKGROUND

The Gulf Cooperation Council (GCC) countries relied, until recently, solely on import duties for tobacco products. The agreement for the introduction of an excise and value added tax (VAT) in 2016 and 2017, respectively, in most GCC countries, was a major breakthrough for public health. There is, however, ample room for improvement.

METHODS

The study examines the outcomes of tax reforms, for both public health and public finances, based on the World Health Organization (WHO) recommendations and best practices worldwide. Tax simulations were performed using the WHO TaXSiM model. The study is based on data from Saudi Arabia, the only GCC country for which sufficient data existed.

RESULTS

We recommend a stepwise tax reform, which involves increasing the current ad valorem excise tax rate, phasing out import duties keeping total tax share constant and introducing a minimum excise, and finally switching to a revenue-neutral specific excise. Specific excises must be adjusted for inflation and income increases. If implemented, cigarette tax reform simulations show that the recommended reforms would lead to a higher than 50% increase in cigarette prices, 16% reduction in cigarette sales and almost 50% increase in total cigarette tax revenue. A significant number of cigarette-related deaths would be averted.

CONCLUSIONS

The recommended tax reforms are expected to lead to significant improvements in both public health and tobacco tax revenues. Our results provide useful insights that are of relevance to the whole GGC region. The effectiveness of the reforms, however, requires a strong tax and customs administration, including the establishment of a good database to monitor and advance public health.

Economic cost of smoking and secondhand smoke exposure in the Gulf Cooperation Council countries

BACKGROUND

The economic cost of smoking has been determined in many high-income countries as well as at a global level. This paper estimates the economic cost of smoking and secondhand smoke (SHS) exposure in the six Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), for which no detailed study exists.

METHODS

We used data from the Global Burden of Diseases Study 2016 and the cost-of-illness approach to estimate direct costs (healthcare expenditures) and indirect costs (productivity losses due to morbidity and mortality). Indirect cost was estimated with and without the inclusion of musculoskeletal disorders, using the human capital approach.

RESULTS

Total cost of smoking and SHS was estimated to be purchasing power parity (PPP)$ 34.5 billion in 2016, equivalent to 1.04% of the combined gross domestic product (GDP). SHS accounted for 20.4% of total cost. The highest proportion of indirect cost resulted from smoking in men and middle-aged people. The main causes of morbidity cost from smoking and SHS were chronic respiratory diseases and type 2 diabetes mellitus, respectively. Cardiovascular diseases were the main contributor to mortality cost for both smoking and exposure to SHS. Including musculoskeletal disorders increased total cost to PPP$ 41.3 billion (1.25% of the combined GDP).

CONCLUSION

The economic cost of smoking and SHS in the GCC states is relatively low compared with other high-income countries. Scaling-up implementation of evidence-based policies will prevent the evolution of a tobacco epidemic with its negative consequences for health and public finances.