Intro
Governments use fiscal policy to encourage healthy behavior. The instruments of government for this purpose are taxes and subsidies, and direct provision of certain health services for free or at subsidized rates. Examples of fiscal policies for health are taxes on tobacco and alcohol, subsidies on certain foods, and tax incentives for health care purchases.
Government intervention through fiscal policy works best when public institutions and credibility are strong, the design and application of the fiscal instruments are appropriate, and consumers' and producers' responsiveness to a price signal is high. When these conditions are not present, direct provision, information and education campaigns, or legislation may be preferable in conjunction with fiscal policy.
The purpose of this chapter is to review country experiences with promoting health through fiscal policies and to examine the usefulness and success of these policies. The chapter considers both the role of fiscal policies in the production of health and the effect of these policies on the well-being of the economy—fiscal policy for health and healthy fiscal policy.1 Little exists in the literature linking fiscal policy and health promotion except in relation to tobacco. This work contributes to filling that gap.
The chapter deals specifically with experiences at the country level with tax policies affecting some goods related to health, such as food, tobacco, alcohol, and condoms; subsidized provision of workplace promotion of healthy behavior and caregiving; and direct subsidies affecting food provision and fortification, cooking fuels, water purification and soap, condoms, bednets, vaccines, and medical research. The chapter only touches on health care provision and does not discuss its financing, either directly by governments or through insurance, because other chapters deal with those topics.
The chapter is divided into five sections:
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The first section provides a general framework through which fiscal policy options can be considered in terms of their impact on health and the health sector.
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The next section examines the experiences in developing countries of using subsidies to achieve health-related objectives (columns 1 and 2 in table 11.1).
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The third section presents examples of how taxes are used in a number of countries to promote health (column 3 in table 11.1).
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The next section discusses nonhealth goods where fiscal policies are often used and have important indirect health benefits (lower part of column 2 in table 11.1).
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The final section presents conclusions and suggestions for further research and policy development.
