Use of Fiscal Policy for Health in Developing Countries
Fiscal policies come in a wide range of designs, but the main effect is either to alter the price of health-related goods or to alter the quantity available. Table 11.2 summarizes the health interventions subject to fiscal policies. The behaviors that require these interventions are divided into the following categories:
[Figure 11.2]
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unhealthy consumption (foods, tobacco, and alcohol), for which the most salient fiscal policies are taxes on consumers and producers, and fines
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health promotion and disease and accident prevention (hygiene, pollution, safety, public health, maternal and child and reproductive health, infectious disease, and healthy lifestyles), for which the most important fiscal instruments are subsidies, but which may also be affected by tax policy
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health care goods and inputs, including insurance and human resources, that may be exempted from taxation, subsidized, or guaranteed as a constitutional right
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other goods that indirectly promote health (education, housing, agriculture, energy, charitable giving, charities that provide targeted subsidies, and so on), which are often subject to their own particular tax regime or sets of subsidies that affect their production or consumption and, therefore, also affect health behavior
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research and development initiatives that can be applied to health and health care goods and are sensitive to tax exemptions and subsidies.
Fiscal interventions can have various rationales, such as macroeconomic benefits, equity, or efficiency—and promoting health may or may not be the primary goal. A fiscal policy may be designed to affect some other sphere of behavior or a good other than health—for instance, education—and the effects on health or the use of health care may be indirect. The shaded boxes in table 11.3 indicate the possible rationale behind each type of fiscal policy.
[Figure 11.3]
A fiscal policy should be effective, efficient, and cost-effective and should promote or maintain equity goals. An effective tax or subsidy reaches the intended target and alters health-related behavior in the desired manner. An efficient policy minimizes resource distortions and involves minimal administrative costs. A cost-effective policy has the lowest cost relative to the desired health goal.
