WHO’s ‘3 by 35’ Initiative: Tackling NCDs with Health Taxes

GS2 – Social Sector

Context:

The World Health Organization (WHO) has launched the 3 by 35 Initiative, targeting a 50% increase in the prices of tobacco, alcohol, and sugary drinks by 2035 through health-focused taxation, aiming to reduce the global burden of non-communicable diseases (NCDs).

Key Objectives:

• Reduce NCD-related premature deaths by 50 million.
• Mobilize $1 trillion in new public revenue by 2035.
• Advance Sustainable Development Goal (SDG) 3.4, which seeks to cut premature deaths from NCDs by one-third.

Understanding Health Taxes:

Health taxes are excise duties levied on products that pose serious public health risks, such as tobacco, alcohol, and sugary beverages. These taxes function as price-based deterrents, discouraging consumption and improving public health outcomes.

Benefits of Health Taxation:

• Reduces Consumption: Proven declines in usage of tobacco and alcohol.
• Enhances Public Revenue: Offers a stable income source for healthcare, especially in lower-income countries.
• Pro-Poor Outcomes: Poorer populations benefit more due to reduced illness and medical expenses.
• Healthcare Savings: Lower incidence of NCDs reduces strain on public hospitals.
• Industry Reform: Encourages reformulation of harmful products to reduce tax liability.

Challenges Faced:

• Equity Concerns: May disproportionately affect low-income consumers.
• Illicit Trade: Weak enforcement can lead to black-market growth.
• Industry Resistance: Strong lobbying and legal pushbacks by affected industries.
• Employment Risks: Potential job losses in the informal production sector.
• Systemic Weaknesses: Poor tax infrastructure and fragmented laws hinder effectiveness.

India’s Health Tax Framework – Strengths and Gaps:

• Current Structure: Combines GST and excise duties, but lacks a unified health policy approach.
• Product-wise Overview:
  • Aerated Drinks: ~40% GST; limited deterrence.
  • HFSS Foods: No dedicated tax on high-fat, salt, and sugar products.
  • Cigarettes: ~60% taxation (GST + NCCD + state duties), while bidis and smokeless tobacco are under-taxed despite higher usage.
  • Alcohol: Taxed under state excise; excluded from GST.

Issues in Implementation:

• Focus remains revenue-centric rather than health-oriented.
• Tax disparity between products (e.g., cigarettes vs. bidis) undermines effectiveness.
• Unregulated informal markets evade taxation.
• Exemptions for small producers dilute tax effectiveness.
• Lack of earmarking health tax revenue for disease control and treatment reduces policy impact.