Constraints to Effective Tobacco-Control Policies
Although substantial evidence exists concerning the effectiveness of numerous policy interventions to reduce tobacco use, the use of these interventions globally is uneven and limited (see a more formal analysis in Chaloupka and others 2001). World Bank data reveal that ample room exists to increase tobacco taxes. In 1995, the average percentage of all government revenue derived from tobacco tax was 0.63 percent. Middle-income countries averaged 0.51 percent of government revenue from tobacco taxes, while lower-income countries averaged only 0.42 percent. An increase in cigarette taxes of 10 percent globally would raise cigarette tax revenues by nearly 7 percent, with relatively larger increases in revenues in high-income countries and smaller increases in revenues in low- and middle-income countries (Sunley, Yurekli, and Chaloupka 2000). Despite this evidence, price increases have been underused. Guindon, Tobin, and Yach (2002) studied 80 countries and found that the real price of tobacco, adjusted for purchasing power, fell in most developing countries from 1990 to 2000.
Why does so much variation exist in tobacco-control policies? The political economy of tobacco control has been inadequately studied. A few plausible areas of interest are outlined here. First, the recognition of tobacco as a major health hazard appears to be the impetus for most of the tobacco-control policies in many high-income countries. Some evidence shows that improved national capacity and local needs assessment could increase the likelihood that tobacco-control measures will be adopted. For example, econometric analyses in South Africa geared to local policy requirements substantially increased the willingness of the government to implement tobacco-control policies (Abedian and others 1998). Second, tobacco-control budgets are only a fraction of what is required. Funding is needed not so much to implement programs as to fight off tobacco industry tactics and to build popular support for control. Third, the most obvious constraint to tobacco control is political opposition, which is difficult to quantify. Opposition from the tobacco industry is well organized and well funded (Pollock 1996).
A key tool for addressing political opposition is earmarking tobacco taxes. Earmarking has been successfully used in several countries, including Australia, Finland, Nepal, and Thailand. Of the 48 countries currently in the World Health Organization's European region, 12 earmark taxes for tobacco control and other public health measures. The average level of allocation is less than 1 percent of total tax revenue (WHO 2002). Earmarking does introduce clear restrictions and inefficiencies on public finance, and for this reason alone most macroeconomists do not favor earmarking, no matter how worthy the cause. However, analysis suggests that the efficiency or "dead-weight losses" from earmarking tobacco taxes are minimal (Hu, Xu, and Keeler 1998). Furthermore, earmarking tobacco taxes can be justified if governments use the funds to benefit those who pay (the benefits principle), provide assured funding for tobacco-control policies and programs, and secure public support for new or higher tobacco taxes. Earmarked taxes also have a political function in that they help concentrate political winners of tobacco control and thus influence policy. Earmarked funds that support broad health and social services (such as other disease programs) broaden the political and civil society support base for tobacco control. In Australia, broad political support from the Ministries of Sports and Education helped convince the Ministry of Finance that raising tobacco taxes was possible. Indeed, after an earmarked tax was passed, the Ministry of Finance went on to raise tobacco taxes further without earmarking (Galbally 1997). Additionally, targeting revenue from tobacco taxes to other health programs for the poorest socioeconomic groups could produce double health gains—reduced tobacco consumption combined with increased access to and use of health services. In China, a 10 percent increase in cigarette taxes would decrease consumption by 5 percent and would increase government revenue by 5 percent. The increased earnings could finance a package of essential health services for one-third of China's poorest 100 million citizens in 1990 (Saxenian and McGreevey 1996).
Finally, a key pillar in tobacco control that can help overcome some of these constraints is the Framework Convention on Tobacco Control (FCTC). The World Health Assembly of the World Health Organization adopted the FCTC in May 2003. It consists of a series of negotiated protocols within a general framework. The first three protocols are negotiations covering smuggling, advertising, and treatment of tobacco addiction. Countries agreeing to the negotiated protocols are to adopt appropriate legislation and, if necessary, implement the appropriate measures. As of February 2005, 168 countries had signed the FCTC, 57 had ratified it, and it had come into force on February 27, 2005.
