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The New Zealand Medical Journal

 Journal of the New Zealand Medical Association, 26-October-2007, Vol 120 No 1264

Taxes for health: the argument is more about health than economics
We appreciated the Journal balancing our opinion on the use of tax as an instrument for health1 with a wry editorial written by a ‘real economist’ trying aiming to counter the notion that economics is the ‘dismal science’2. However, we think he may have scored an ‘own-goal’.
Assumptions are often the economist’s building blocks. But it is hard to understand why the editorial assumed we were making an economic argument in support of economic instruments such as taxes, duties, and subsidies. We were not. Nor did we argue only for economic instruments in the form of large increases in taxes on any product or behaviour that might be unhealthy as the editorial implied.
Rather we argued that carefully targeted and evidence-based economic instruments are an underused instrument to improve and protect public health. We should perhaps not be surprised that an economist, who does not understand that climate change is a health issue, misunderstood these points.
Tobacco taxes have long been used in this way internationally3 and are described as a key intervention in the government’s current Tobacco Control plan.4 However, there has been no real increase in these taxes since 2000. For alcohol we argued that the impact of differential taxes by level of hazardous consumption should be explored to see if it could impact on the huge toll of preventable death, illness, and social dislocation caused by excessive drinking.
This was exactly the approach taken with the changes in excise duty aimed at ‘alcopops’ introduced in 2003, a category of drink apparently formulated and marketed by the alcohol industries to the youth market. For food, we suggested the focus should include exploring the potential for selective subsidies on healthier foods, not just additional taxes on unhealthy foods.
Our arguments are not based, as one might infer from the editorial, on the narrow view that health-promoting taxes are potentially justifiable only to balance up revenue generation with ‘externalities’ such as health care and other societal costs, nor based on Pigou’s notion of addressing market failures.
We are public health professionals arguing for better use of economic measures, where they are shown to be effective, as a rational policy instrument to achieve public health goals. We do so because many public health goals are worth achieving in themselves. We believe that society values highly measures that prevent human suffering and early death, regardless of their economic ‘efficiency’. Indeed, it is the exclusive and uncritical focus on ‘efficiency’ is which, is why economics is often portrayed as the dismal science.
It is also because we value personal choice and autonomy, including the right to make unhealthy choices, that we advocate taxes and subsidies as a key component of rational health policy. Taxes and subsidies provide signals to the consumer to reduce unhealthy consumption, and start to counter the often all pervasive signals from vested interests through blanket advertising of unhealthy products, whilst continuing to allow individuals to exercise their free choice.
Dr Crampton makes much of the superficially seductive argument that economic instruments are used by paternalistic public health control-freaks aiming to curtail autonomy and take away the ‘interest’, ‘flavour’, and ‘fun’ in life.
Such arguments ignore the degree to which the tobacco, alcohol, and food industries manipulate child and adult consumers through clever, aspirational marketing. It also ignores the evidence of addiction and regret among many consumers. Thus if smoking adds so much spice and interest to life, why is it that smokers almost universally regret starting,5 and most state they wish to quit and have tried to do so? 6
Surely measures, including increases in tobacco taxes, which prevent initiation and subsequent addiction to tobacco enhance freedom7 by protecting young people from a life of nicotine addiction and the associated health hazards? These arguments we believe would cut little ice with the thousands and thousands of victims of these unhealthy products.
Perhaps Dr Crampton would like to discuss his views with some of the thousands of smokers (and their families) diagnosed with cancer and heart disease each year, or some of the victims of domestic violence from drunken partners. We wonder how much ‘fun’ they attach to smoking and drinking, or how much ‘interest’ it has added to their lives?
Finally, the editorial dismisses the notion of independent policy-making agencies because there is no consensus about health goals and the use of economic instruments to achieve them. This is a standard argument of those whose interest is profit not health. We believe there is a strong consensus about the importance of achieving public health goals, and whilst there is not complete consensus (when is there in politics?), that there is strong support for selective taxes and subsidies to promote the public health, particularly where the purpose has been properly explained, or as we advocate some of the revenue is dedicated to health purposes.
The problem with the ‘hurly-burly’ of normal politics, which Dr Crampton advocates to deliver appropriate policies, is that it is often dominated by overt and covert influences of powerful corporations whose over-riding aim is to maximise profits, even if it is clearly to the detriment of the health of the population.
We believe there is good evidence that most of the public want protection from nicotine-addiction, protection from alcohol-related harm, protection for their children from the obesity epidemic etc. Furthermore, we think that most people would agree that public policy-making should not be dominated by the preferences of vested commercial interests.
Therefore we suggest the adoption of the model provided by the Reserve Bank and PHARMAC, where a democratically-elected government establishes agencies that are at arms-length from immediate political and corporate interference. Such agencies should have appropriate governance arrangements to ensure transparency and accountability to an independent board. The agencies should consider information from appropriate experts (e.g. health professionals, public health researchers and practitioners, economists and health economists, ethicists, and political scientists) and from the public, and can establish and implement policies, including economic ones where appropriate, to fulfil public health goals.
Competing interests: Two authors (NW and RE) have previously worked for NGOs and the Ministry of Health on tobacco control issues, and one author (NW) for nutrition issues. All of the authors have been employed as medical practitioners in tax-payer subsidised health systems and have even prescribed tax-payer subsidised pharmaceuticals, including contraceptives. To the likely surprise of some2 they have even prescribed subsidised condoms— given the public health benefits of preventing unwanted pregnancies and sexually transmitted infection.

Richard Edwards, Nick Wilson
Department Public Health, University of Otago, Wellington
(richard.edwards@otago.ac.nz)
Osman Mansoor
Public Health Physician, Wellington

References:
  1. Wilson NA, Edwards R, Mansoor O. Economics can be good for health: need for rational policy without the influence of vested interests. N Z Med J. 2007;120(1263). http://www.nzma.org.nz/journal/120-1263/2757
  2. Crampton E. Economics can be good for health, but it needn't be so dismal [Editorial]. N Z Med J. 2007;120(1263). http://www.nzma.org.nz/journal/120-1263/2756
  3. Jha P, Chaloupka FJ. Curbing the Epidemic: Government and the economics of tobacco control. Washington DC: The World Bank, 1999.
  4. Ministry of Health. Clearing the smoke. A five-year plan for tobacco control in New Zealand (2004-2009). Wellington: Ministry of Health; 2004. http://www.moh.govt.nz/moh.nsf/0/AAFC588B348744B9CC256F39006EB29E/$File/clearingthesmoke.pdf
  5. Fong GT, Hammond D, Laux FL, et al. The near-universal experience of regret among smokers in four countries: findings from the International Tobacco Control Policy Evaluation Survey. Nicotine Tob Res. 2004;6 Suppl 3:S341–51.
  6. Ministry of Health. New Zealand tobacco use survey 2006. Wellington: Ministry of Health, 2007. http://www.moh.govt.nz/moh.nsf/pagesmh/6384/$File/nz-tobacco-use-survey-2006-v2.doc [large file].
  7. Wilson N, Thomson G. Tobacco taxation and public health: ethical problems, policy responses. Soc Sci Med. 2005;61:649–59.
     
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