The Time Is Now to Raise Health Taxes

MASOOD AHMED:
OK. Welcome, everyone, to this event on health taxes and why we should be raising them now. And we'll have a panel that will talk about this. I'll save that for a moment. But this event follows on from a report produced by a task force on Fiscal Policy for Health that produced this report recently. And in a minute, we're going to get a video, a short video from Larry Summers, who was one of the co-chairs of that task force, along with Mike Bloomberg and Mia Mottley. And Larry Summers is also (CLEARS THROAT). Excuse me. Larry Summers is also, as you know, the chair of the board for CGD. So - and CGD, in fact, colleagues sitting here provided the secretariat for that task force's work. Let me just say a couple of things about the task force report that struck me. And there are many things you can do in fiscal policy, and colleagues here will talk about them, but there are very few that you do where it's like so obvious that you just get on with it. And raising taxes on tobacco, on sugary beverages, on alcohol, which are way too low in many countries, is one of those things where technically, the benefits are so obvious, you know?

You could save a million lives a year. 50 million lives over 50 years. You could raise $3.7 trillion in five years, and 2 trillion of those in low and middle-income countries, which actually is significant in relation to their total revenues. I think it's about 40% of their total revenues [correction: the figure is 40% of healthcare budgets, not total revenues]. So you save lives, you raise money... It seems obvious. We did a report five years ago that kind of made the same point. We don't see the action. And so, I think the really interesting question today that I'd like to explore in the panel, which I'll come back to in a minute, is not so much the "why". I think the why becomes clear very quickly when you read the report, but the why isn't it happening And how can we actually make progress on this agenda? I think that's the really interesting set of questions that we need to explore because clearly, we're not making enough progress. In fact, some countries over the last five years have gone backwards. Cigarettes are becoming more affordable in some countries.

And of these three things - tobacco, alcohol and sugar, I mean, in some ways the biggest number of deaths is attributable to tobacco in the near term. So clearly, something isn't connecting, and I think it would be great to explore that today. Before we do that, though, as I've said, we're going to play a very short, one minute and 58 seconds I was told by Sarah, video by Larry Summers, and then we'll get the panellists on. I'll ask them some questions. I hope you'll ask them even tougher questions, and then we'll take it from there. So let's play the video. (VIDEO PLAYS)

LARRY SUMMERS:
Thank you. I've been honored to co-chair this task force on fiscal policy for health. Today is important. The Task Force on Fiscal Policy for Health was first formed in 2018 to address crucial health problems through sound fiscal policies. Today, our work continues with an important new report that should be a wake-up call. Its message is simple: urgent action is needed to reduce death, to reduce disease that is linked to the consumption of tobacco, alcohol, and sugary beverages. These issues are especially important in low and middle-income countries. Hear this: each year, because of consumption, excess consumption of these substances, 10 million people die worldwide with an economic cost of over $4 trillion. Raising taxes on these products is good for health, good for budgets, and good for reducing burdens on healthcare systems. That makes them a unique and timely policy solution for the crises of today. The recent pandemic, along with recession, inflation, and geopolitical conflict have led to a health and fiscal crisis that can be mitigated by raising health taxes.

There's lots of work to do, but we can realize the life-saving and economic development benefits of taxes. The most important of these taxes by far, the greatest low-hanging fruit in terms of improving human health around the world, comes from raising taxes on tobacco. (VIDEO ENDS).

MASOOD AHMED:
OK. The message is clear. Now, let's get our panellists up. So... while they're walking up, I'm going to just introduce them. So immediately to my left is Emmanuel Eze, who is a senior tax policy advisor to the African Union and the African Tax Administration Forum. So that, I think, is very important to try and get a perspective of the interactions that you have, Emmanuel, with the policymakers and finance ministers. Next to Emmanuel is Mario - Mario Mansour, who's the division chief of tax policy in the Fiscal Affairs department of the IMF. And next to Mario is Emilia, Emilia Skrok, who's the global manager of the Fiscal Policy and Sustainable Growth Unit in the macroeconomics, trade, and investment global practice at the World Bank. So why have we picked these people for this panel? And I think the reason is that if you look back and see, all three of these organizations are providing finance ministers in developing countries - in Emmanuel's case, in Africa, in Mario and Emilia's case more broadly - with advice on tax policy choices all the time.

How do you - where do you focus, how do you make progress, and then also technical assistance for helping them to strengthen tax policy capacity, tax administration. And so, they can really be levers for ramping up the transmission of the findings that we just heard from Larry... into the national policies of countries as they begin to make changes on tax policy and tax administration, which will have not just a health impact but also a fiscal impact. So I really want to - but as I was saying earlier, you know, we really haven't yet cracked the nut. So my question to each of you is going to be the same one. The first one, I want to hear a little bit about your experience, your take on it, starting with you, Emmanuel, if I may, which is, you know, why do you think that is? Why do you think that our progress on getting countries to implement what seems such a no-brainer has been so hard? What are the kinds of things that you hear when you propose this to colleagues, or do you propose it?

EMMANUEL EZE:
Thank you very much. First, I want to thank the CGD for inviting ATAF. ATAF is an intergovernmental organization which fought for African countries, and we are glad to have worked in different aspects of fiscal policy advisory to both Ministry of Finance and then tax authorities. To address the question, the challenges we have, and we have done with some partners quite a bit on health taxes, but the challenges we see on the field, one is industrial lobby. I mean, I don't want to go into the why like you mentioned, because it's obvious. Health tax is a win-win, a win for the tax authorities or the government because they have more revenues and they also have less expenses to incur in terms of providing health for their citizenry. A win for the taxpayer because obviously, it helps them make better, healthier choices in terms of prioritizing their expense and everything. But then, why haven't we cracked the nut? What we see is, one, there is a whole lot of industry interference. So you are pushing for advocacy to get this translated from policy to practice, and then there's pushback from the industry themselves.

We have seen this in quite a lot of countries. And the lobby is rich because they have money and they are able to turn the tables around in some instances. And I will tell you, I'll give you one example. In West Africa, which comprises about 15 countries, they have issued a directive on health tax. There is a regional-wide directive on health tax. That directive has mandated each member state to raise tariffs on those items in scope that is sugar-sweetened beverages, tobacco, and alcohol products to 50%. From our estimate, raising it to 50% would reduce consumption to between 40% to 50%. Right? But it's only one country out of the 15 that has implemented it. The other 14 are dragging their feet in implementation. So yes, there is a pushback from the industry. There is also a lack of policy coherence amongst member states. There is a bit of a lack of harmonization because if you raise taxes on a tobacco producer in Nigeria, it could move to the neighboring country and continue to stream the product from there to the rest of the members.

So it's quite here and there, a lot of factors that...

MASOOD AHMED:
Have caused it.

EMMANUEL EZE:
Yeah.

MASOOD AHMED:
So, Mario, is it - in your work, well, actually not just your own work directly but also in the work of the individual country teams that are working with countries, but drawing on the expertise of fiscal affairs in the IMF, what's your assessment? Is it primarily pushback from the industry or what else is holding it back?

MARIO MANSOUR:
I mean, I do agree this is a factor, but I would argue this is a factor that's relevant across any tax reform, not only just excise - health excise taxes. I think in the report, actually, of the task force, it says nicely what we have observed is that more countries are doing it but not well. So the question that we should ask is, what lessons can we learn from these countries that have done it for the future countries that will do it? And I think there are two points I would like really to focus on. One is design. Policy design is extremely important. And what we observe in countries, in all areas, whether it's, you know, some more than others, tobacco or sugary drinks or alcohol, design simply is not good enough. And I'm not talking just about the level of the tax rate. I'm talking about, you know, the design of the excise tax base itself. What is taxed? How do you treat imports versus domestic production? Do you use the excise as just another tariff? A lot of countries do, not only by design, by law, but also by asymmetric implementation.

So for example, you can have implementation rules where you would say, well, on imports is the value of the imports, but on domestic production, well, we don't know. There is no value really before the products leave the manufacturing company. So we're going to work out rules that would estimate the value that would happen to be, well, depressed relative to market prices. So design matters, and the lesson that we take from our technical assistance to countries is that it's not good enough. It can be better. The second one, which is a broader issue which perhaps we can come back to this later, is earmarking. Historically, including, you know, institutions that pushed for health taxes thought that earmarking would be an easy argument to address a political economy issue around implementing new taxes by saying, well, just give support to the tax and you'll just get it in your budget as a ministry of health. You can spend it the way you see fit. Earmarking in taxation is way broader than this.

It covers a lot of ground. And what's really specific about earmarking is often, earmarking takes the form of an excise. It takes a form of a tax on turnover, small rates, but for ministry yields a lot of additional money that they cannot get through the regular budget. So by putting excises that have specific objective, companies and other observers are saying, well, you're just multiplying earmarking. The point here is that the overall health of the tax system is important. And if you are to increase the number of excises for a clearer objective than general earmarking, you have to deal with the rest of earmarking and you have to advocate against it because what we're trying to do here is just raise money for the budget so you can spend more on health, for example, or education. We're not doing an excise just to tell the Ministry of Health, you're going to have more money in your budget next year. And probably, it's not going to be looked at in the same way as the overall budget would be looked at.

And from my experience over the past 20-plus years, earmarking is a fundamental issue in developing countries that we haven't been able to address properly in the context of good tax reform.

MASOOD AHMED:
So I want to come back on earmarking because... did I understand you correctly at the end to sort of basically say that you think that you want to move away from earmarking for all the good tax policy, fiscal principals reasons? Because you don't want to sort of tie up all these streams of income with streams of expenditures. And I guess what I want to come back to, maybe you can think a bit about this is, politically, though, is it easier to raise taxes on, let's say, tobacco if you link that revenue stream to some identifiable health improvement program? So, you know, all our basic fiscal - as fiscal economists, we've always been trained to say any kind of earmarking is a bad idea. You know, you just want to have basically your funding, general revenues, and you don't want to tie your systems up. But politically, does it help or not? It's worth thinking about. Emilia, what's your take on sort of what's holding it up? Why are we stuck?

EMILIA SKROK:
So I want to thank you very much for inviting me, first of all. It's a pleasure. So I want to start from saying not to be overly pessimistic about this because actually, all the domestic revenue mobilization agenda is really difficult, and we have seen not much progress in the last couple of years overall. Right? Though we understand what are the needs, financing needs, and we have seen a lot of indebtedness and liquidity problems. So it's not only about health taxation per se, but I would say that it's overall the big picture and kind of. I would think part of the problem is a bit of that framing, you know, why do we do this? We tend to do or tend to talk about health benefits, which is super important. But what I think, there are these political/economic issues that are actually linked to distributional issues. We know that these taxes are, from the health perspective, progressive. So they help, you know, low-income population. But we probably haven't made enough of an effort to communicate that there is a positive distribution, health distribution impact, but it could be also, you know, negative income impact in terms of the burden.

So there is, I would say, an equity perspective on the health side and an equity perspective on the income side. And in many developing countries, we don't have a good system for compensation of some of the things. So getting back money, which is linked to the kind of your earmarking story. So this would be one. From our perspective, I think the misconceptions about what we have achieved and what are the successes is a big issue. We tend to say about things that, you know, didn't work, but there are a few cases that things have worked. We have a few positive cases in Vietnam, Philippines, and North Macedonia - I could name a few - where we can, as Mario said, learn from these positive examples, which very often is about the design and implementation. And finally, I want to say in the bank, working in now currently 70 countries on these issues, we see that these more tailored, country-tailored data-driven approaches where we could actually, you know, simulate what would be the impact on the particular groups, you know, on the particular design ad valorem versus the specific, how this would change the price of - it's very often working.

So I think that's where a ministry of finance, a ministry of health see kind of potential results and they are able to communicate this. Then we see a little bit more of the take-up on this, not only on this reform, I think on overall DRM [Domestic Resource Mobilization] reforms.

MASOOD AHMED:
So I want to pick up on your point about framing because as you said, you know, how you frame it matters. And if you were to look at the experience of the World Bank in working with countries where there has been progress. You said, you know, Philippines, Vietnam, Colombia. I think there is a number of countries you can come up with. What was the framing that was most effective? Was it - did you find the same framing worked across or was it like you had to have a customized framing for each country that was different? What worked? Just say a little bit more about that.

EMILIA SKROK:
So I think the kind of framing that used to work is around these triple benefits that, you know, you actually try to show that it has health revenue impact, which very often is - well, it's small, but it adds. And then this, I would say, progressivity part like that, that brings, like, more to the low-income population. They tend to use some of these tobacco products alcohol more than the rest in terms of consumption patterns. So the framing was the same, but I think what really works is that you land in the country and you try to kind of look at the very specific data and, you know, price levels and see that, differentiate between type of products and type of population that are consuming of those. So I think this is what has been successful and this kind of link between design and introducing. So in terms of the world Bank, you know, we have like technical systems, but we have also our systematic way of engaging with countries which are in our jargon called core products, public finance reviews.

So we don't come to these countries once in ten years, but we actually come and tend to build our discussion on these taxes into our continuous dialogue. So this seems to work, not always from the first discussion, but this coming back to the topic is working. And the fact that we have also programs that support on, from the financing point of view, not only giving money against these reforms, these kinds of programs that are financing some items in the budget, but we have programs that disburse, again, results. And when we design these programs, very often we provide very specific technical assistance and capacity building. Because one is to say, we advise you on the design, here is the design. The other thing is how you would implement it, how you would execute it, how you collect it, you know? Track and trace systems, how to establish those. This is where we have seen successes, where we will continuously engage across the dimension of design, implementation, and funding.

MASOOD AHMED:
That's where it's more likely to get traction.

EMILIA SKROK:
Yes.

MASOOD AHMED:
Can I come to you and get your sense on what framing works? And could you also - I mean, one of the arguments that you hear from countries is the pushback from the industry. But the other argument you often hear is that this is regressive. It's going to hurt the poor. Right? So they say, well, look, you know, in poor people, the low-income people, tobacco may be something that is part of their expenditure and it's going to hurt them. And then you need to find a response. Now, one response to that, of course, is that on the health side, it's progressive. But that's a little more abstract from the finance minister's side. I want to get a little bit of your sense of what you think in the conversations you and your colleagues have been having with African policymakers on the finance side, what arguments work well?

EMMANUEL EZE:
Alright. Thank you. Apparently, I tend to agree with my colleagues that it's progressive on the health side, but that's an understanding I had at a higher level. What we have seen in the field is that when you frame the need to implement these fiscal measures around the health benefit, it helps. It helps one because one of the advocacy items that we have, we tell them. It helps the taxpayer himself make more health-prone choices in terms of where to spend their money. It also helps them spend their household income on healthier alternatives. And that takes me to how do they view it as an additional revenue in the hand of government. And that's where we speak to earmarking just a bit. In some of the countries where we have worked in, we have seen some level of deficit of trust between taxpayers and the government especially, when it comes to how they spend revenue generated from taxes and all that. So, to that extent, what we could extrapolate is that there is tendency for people to be more prone to complying with these health taxes if they could see and verify outcome of what the revenue have yielded in terms of health facilities, provision of better health care services and all that.

And this, in my experience working with revenue authority in Nigeria, there was also some other element. There was a state called Lagos. They're known not to pay taxes as at a point in their history. Then the governor comes in, collect taxes and he builds roads, and puts a label, this road was built by taxpayer money. We observed that over a period of five to six years, the tax compliance rate more than quadrupled. So, I think that argument could be made - I'm not a budget expert, but an argument can be made that taxpayer morale may be boosted when they see a fiscal outcome from compliance.

MASOOD AHMED:
And can I come back on one other point you raised earlier, which is sort of cooperation across countries? So, one of the arguments that the industry makes is you raise taxes here, say tobacco, all you'll end up with is there'll be a lot of smuggling and there'll be a lot of illicit products coming in across the border, and you won't collect any taxes on them. And our sales will get hurt, but there'll be no improvement in health. The evidence is that these arguments are exaggerated, but at the moment when they're made, they sound appealing to finance ministers. Have you found that argument and how have you dealt with that?

EMMANUEL EZE:
Thank you. Like I raised earlier on, there is trade liberalization going on in Africa. In ECOWAS you have the ECOWAS trade liberalisation scheme. Then at the continent level, you now have the African Continental Free Trade Area agreement. The essence of this trade liberalization is to have free movement of people, goods, and of course, capital. And this is where it becomes very important that regionally there is some form of harmonization in terms of fiscal measures targeted at health taxes, because what we have also seen practically is that if you succeed in implementing some of these heightened taxes targeting some of these products, if it is on income tax aspect, or even in tariff, if it's tariff, the entities that either bring in these products or manufacture them, we just route it through the neighboring country. There's rule of origin rules which ordinarily should prevent it from coming if it's coming from outside the region, but some of them have plant. So, it is a product from the region, and then it finds its way either through informal means to still get to the country.

So, you lose everything. You don't even collect the small you were collecting before, and you don't collect at all. It goes under the underground economy, and that is quite problematic. If you investigate the underground there are informal economies in the region and in the sub-Saharan Africa, a huge chunk of it in terms of value, we have things to do with tobacco, drugs, and all those kind of products.

MASOOD AHMED:
So, Mario, same question to you. How much more broadly looking across countries has this issue of the worries about smuggling of products and bringing them in, avoiding any kind of taxes, and losing even what they earn now? How much has that been a concern?

MARIO MANSOUR:
I think it is usually regionally, I wouldn't say globally. But regionally, smuggling of high-value goods is an issue. I mean, we learned a lot about this in advanced economies back in the 80s and the 90s when tobacco excises started to be increased quite a bit. In my own country, also in Canada, we had actually policy reversal in the early 90s because of smuggling across the border between the US and Canada. We know a lot about how to deal with this. Some level of regional collaboration is needed, both in terms of policy design to reduce incentives to do this. For example, not to have large gaps in the effective rates across excise goods. But we learned a lot more about enforcement and how countries can collaborate to enforce. So, I think for this there are solutions. Question is whether these are taken into account. Again, the design issue I mentioned it is these things you think about from the beginning, not when you face them and you develop solutions for them from the beginning, including your regional collaboration and coordination, and West Africa probably is one of the best examples outside of the European Union, where coordination of exercises is quite extensive.

West Africa is perhaps one of the rare regions where there is tight coordination of exercises, but again the implementation is lacking. This is where the problem is. And then one wonders whether this is actually intentional or unintentional because you can compete on the policy, but you can also compete in tax administration by not choosing to collaborate. And so, you as a country, you benefit more from smuggling than others. So, these are real issues I would say not for all exercises. For example, you're not gonna find smuggling in sugary drinks to the extent of tobacco, for example. It's just too costly to do too bulky. But you will find it with high-value sugary drinks. It happens, for example, in the Middle East. For example, when the GCC introduced taxation on sugary drinks, there was at the beginning a movement, for example, to smuggle small sugary drinks, high energy cans across countries. So, I think history taught us that governments are always behind the market in terms of learning about the problems and adjusting to them.

So, we're always chasing actually a moving target and an asymmetry in knowledge on how market players can beat policy.

MASOOD AHMED:
Thank you. What about technology in trying to deal with this issue? Has technological developments made it easier for governments to be able to control this? I mean, Mario, I don't know whether you found that, and I want to get a little bit of a sense of is this an area where the bank and the fund are providing any support. For example, now you get a packet of cigarettes that have all kinds of electronic bands on them, and if we believe the drop in the price of sensors, pretty soon, every cigarette will have a sensor in it and tell you where you smoked it. So, is that helping?

EMILIA SKROK:
Well, I think technology in general helps in tax collection these days and some of the solutions becomes very cheap. So, I would say yes. But I wanted to come back to the previous discussion because I actually agree with Mario a lot on the collaboration. And I want to emphasize that before even collaboration starts, you need to have certain administrative capacity to control things, to detect and enforce. And of course, technology would help in trying to track. But whether you would have an ability to catch and actually impose a fine, whether you would be able to put these incentives against the certain types of crimes is something I would say very important. So, I'm sure technologies will help us in detecting and following, but I don't know whether this would be enough to actually change the situation, what is happening. And also we have seen in developing countries that technology is also making this... There is this digital divide. Some technologies are easier adopted in countries with a high level of development.

And in others, of course, it goes so fast and it's so advanced that I'm sure that there is a lot of good examples in developing countries in consumption tax collection increasing because of the technology. India is one of the examples, GST, et cetera. So, I'm sure that here in health taxation we'll see a lot more. But I do worry that you have to have certain capacity to use that technology and then actually enforce also to basically act upon your findings and to increase collection and to change the behavior.

MASOOD AHMED:
I want to make sure that we have an opportunity also for people sitting in the room to ask questions. But before I do that, let me just ask one final question. Larry's final remark was that the lowest-hanging fruit right now is tobacco. And it's the one we've talked about for longer, or more recently than it became clearer that not just tobacco, but alcohol, although depends on countries, a bit more... And then high sugar content, beverages another one. Now people are talking about ultra-processed foods. These industries are all quite different. You can think of tobacco industry is not quite the same as the industry producing sugary beverages. And if you start going into ultra-processed foods, you get into a whole different. What's your sense of tactics and strategy? When you talk to finance ministers and they sort of say, look, this is all too much, when you have to do this and this and this, are you saying to them, focus on tobacco or alcohol or are you saying to them, look, you really need to think of this as a broad-based health tax agenda?

It may take longer, but you really need to move on all of these fronts. What's the practical approach to doing all this? So, what's your advice? You come and tell me about all these great things, and I say, yeah, but what do I do? I mean, I can't do everything.

EMMANUEL EZE:
The question is an interesting one because I had a practical experience. So, as an example, we once designed health tax for a certain country in West Africa. And at an engagement with the ministry of finance, there was a buy-in. There was obviously a buy-in. Everybody was happy with the design, but the getting it across the board towards implementation failed. And the key reason why it failed was because we included sugary drinks and sugar-sweetened beverages. Many people were supportive of let's do it with tobacco, let's do it with alcohol. But when it got to that, the argument was, you are targeting the poor. A minister said election is coming, these guys will think we are after them, especially the poor masses. So, having that as a background, as a practical approach, my advice would be to look at what works in a given context. It could be to start with a certain product, scale it up over time. You could start with the quick wins, which most people will want to go with, like alcohol and tobacco.

These in the context of developing countries, a lot of people see it as exotic goods. If you can afford whisky, you could afford to pay taxes on it, you shouldn't complain. But drinks that are sold for pennies on the street, they are sent for the bulk of the masses who are in poverty. And there is a misconception that when you tax them more, you are targeting the poor. So, those narratives, you have to find a way around it. And my approach would be you could start smaller scale over time.

MASOOD AHMED:
So, you have to not just convince the finance minister, but first, you have to convince the mission chief. And the mission chief is like, I got 15 things that I'm being pushed to do, and now you want me to talk to them about SSBs. So, what's your advice too?

MARIO MANSOUR:
I mean, for the mission chief, it's easy if there's money in it. That's usually, particularly a program countries the IMF has lending with their country. I mean, this is a great question, Masood, because I think you mentioned at the beginning that the 'why' is not so important, it's the 'how'. I think it's really nice that you asked the question about the 'why'. So, one big question that we usually don't address in this whole debate is, is it really more revenues? I mean, yes, you raise more revenues from excises, but the real question is, do excises increase total tax revenues? Because for countries where the money is needed, where the revenue argument holds, what you want is increased total tax revenues, not only revenues from excises. If governments for whatever reasons find good reasons to reduce other taxes, we're back to square one. This is a case of advanced economies. Advanced economies usually did it on the basis of health. We don't want the revenues. Even in some cases, they said, well, we're gonna decrease other revenues.

So, that's an important question. So, my first advice to a finance minister would be, why do you want to do it? Is it the health agenda or is it the revenue agenda? In the short term, the two can be consistent. In the long term, forget it. They're not consistent. I mean, even in France, France had sugary drinks back in 2008. Today probably no French knows that France has a sugary tax. The health argument for the tax people forgot about it, it's not there anymore. Yes, they raised from it a few million euros, but is it additional? We don't know. So, back in the 90s, when a lot of countries in Africa did VAT, there was a lot of econometrics, empirical studies about, did VAT increase total tax revenues. I think we need to do the same thing for excise taxes...

MASOOD AHMED:
What was the answer to that by the way?

MARIO MANSOUR:
The answer was in some studies, including some of the stuff I did, yes. At the beginning, though, the answer was clearly not because VAT replaced largely tariff revenues and other revenues. So, I think this is important. So, the finance minister and the health minister needs to understand why they're doing this. And are they in it in the long run for health reasons, or is it just a money grab in the short term? And my advice would be you have to be honest with the population about why you're doing it. If you're doing it just for a money grab in the short term, chances are it's not going to work. I would argue that the reason why more countries do it, but less revenue is raised from it, is precisely for that.

MASOOD AHMED:
What's the bank telling people?

EMILIA SKROK:
Well, I think that... It's difficult to answer this after a very good two answers. But I don't think the revenue argument is the first one. The first one is health argument. And where do we start? We always try to start from where the biggest problem is. So, we would see if you have certain health outcomes, certain consumption patterns we would point to the ministers what is the - in our view - critical issue. But of course, then the political economy argument comes, what are the kind of mapping of stakeholders and kind of resistance and lobbyists and what is actually feasible or what is less feasible, and how big appetite from minister is to face some of this resistance. And very often we in the bank go to not only ministry of finance, this is where we offer lending, but we talk to line ministries, we talk to health ministries. So, we're trying to bring this health ministry and ministry of finance together. For ministry of finance, the argument type of revenue take from that is not really a strong one.

So, they need to see this bigger long-term gain. So, then that's why we go to ministry of health and discuss. And for ministry of finance this earmarking is also a big problem because whenever they think about new revenues they don't want to tie, they don't want to introduce new rigidities in their budget processes. Though ministry of health would love it. So, they would say, we won't actually spend this money into some kind of investment in health system. So, it's a tricky agenda because even within one government, there may be different incentives on the design. But I would say that health argument is the one and the size of the problem and the issue this is where we would start the discussion. We may not end up there, but we will start with it.

MASOOD AHMED:
That's where you want to start?

EMILIA SKROK:
Yes.

MASOOD AHMED:
OK, let's see anybody in the audience. Let's try and take a couple of questions. I've got a gentleman sitting over there. Who? There's a lady in the back. Let's take those three and then let's try and see if we can make them concise. So, I'll start with you over here, please. Just wait for the mic to come your way. There you go. Thank you for bringing it up.

ANDRES MEJIA:
Good afternoon. Thank you very illustrating panel and Mr Andres Mejia, Keough School Notre Dame. I wanted to go back to the question of the politics of the industrial lobby. And certainly, they have embraced a policy design because they would be quite skillful at framing whether you are talking about taxing sugar products, tobacco products and change and produce alternative products to evade straightforward tax. They've embraced the framing issue, and they can easily change narratives certainly, in terms of freedom of choice or allowing people to choose whatever they want. And they have multiple entry points for political lobbying - at the legislative level, judiciary level, marketing campaigns, media, et cetera. So, I was wondering whether you have any examples of win-win situations for governments and the lobbying industry where they would see the benefits or agreeing, even though grudgingly, to accept these kind of taxes?

MASOOD AHMED:
Then the gentleman here and then I come to you in the back.

YANN ILLIAQUER:
Hello everyone. Thank you very much for this discussion. Yann Illiaquer from Global Health Advocates in Paris. I was wondering if your organization or the task force are exploring other health taxes options such as, you mentioned it quite quickly, but unhealthy processed food or taxes on toxic phytosanitary products or chemicals, which we know have a strong impact on the health of the people and could also be taxes to generate revenues.

MASOOD AHMED:
Great. Thank you. And then the back.

MARISTELA MONTEIRO:
Hello, my name is Maristela Monteiro. I'm a representing Movendi International and I've been working in alcohol policy for many years. And one point I wanna make is that I don't agree that these industries are different. I think they are more similar than they are different, and they are connected. We know now that it's a very big lobby and the interconnections, and they're learning from each other and supporting each other in fighting against any regulation of themselves. And in terms of technology, there are benefits. But also, if you think about social media and internet and how it has skyrocketed, or the digital marketing during the COVID pandemic: this is a technology now and AI interfering with advocacy against these policies, then we should also think of the negative side of technology and how we can regulate the technology to prevent that. And the third point is: the three together or not? And what do you think in terms of the basic understanding of how to regulate these industries should be there, even though you may start with one product and then move to the other?

But try to educate not only ministers of health but of finance and others on the benefits of each of these industries being regulated. And the health taxes there are needed. And I'll stop there.

MASOOD AHMED:
Thank you very much. Is that it? Anybody else? No. One lady over here under the wire.

FIONA LAWLESS:
Thank you. I wasn't sure if you were just taking three at once. I guess one question...

MASOOD AHMED:
Just introduce yourself.

FIONA LAWLESS:
Oh, sorry. My name is Fiona Lawless. I'm a health policy advisor for an organization, Sightsavers. And I work on a couple of different health areas. I guess one simple question I have is you were talking specifically about talking to finance ministers, whether it's for health reasons or finance reasons, that they're wanting to implement these fiscal policies. Do we talk about the finance implications of improved health outcomes from NCD management and long-term NCD management and being able to redirect that finance to other health areas? And then another question, which is kind of a broader question is, just flicking through the report and looking at the reasons for the report and looking at it in terms of non-communicable diseases, we know that the next or we talk a lot about the next biggest pandemic being the climate impacts on health and what sort of fiscal policies could be brought in in terms of that for mitigating the huge impact that climate is having and will play a much bigger impact in people's health outcomes, particularly in terms of non-communicable diseases going forward.

MASOOD AHMED:
So, it's an interesting question, examples of win-win. The task force. Look at the task force members here. Think about other taxes including but beyond ultra-processed foods. Actually question for that same applies to you. We’ll leave the task force people to respond offline. But do your organization thinking about that? What about the regulation of industries more broadly in a way? And then two questions, one on climate that you raised as well. Are we thinking about those and the benefits of avoided expenditures in terms of NCD management? We've been talking about these numbers more in terms of the revenue raising. But there's also the savings that will accrue from reduced NCD management costs linked with these diseases. So, pick and choose. Don't have too much time. Let's say two minutes to each person. So, I'll start with you, Emmanuel.

EMMANUEL EZE:
It's OK. Thank you. I quickly respond to just two. One, whether the situation you have win-win. In my experience, I have not seen situation you could have win-win between the government and the industry itself in terms of applying the excise where, I mean government aims at reducing consumption, industry focuses on increasing consumption, and of course, profit in the process. That's my perspective on that. The second item being regulation of technology as a means to also try to help in implementation of fiscal measures to curb consumption. That is important, I must have to admit. But I also now tie back to a point raised by colleague earlier on about capacity. Enforcement and compliance, both offline and online, is very key to ensuring the desired outcome. And the experiences show that there is a lot of capacitation need, especially at developing country level to get that happening. And when we talk of enforcement, we also look at the deterrent value of punishment if offense has been committed in the process.

All that have to be considered in the broad scheme of things for it to work properly. Thank you. I yield for others.

MARIO MANSOUR:
I think I will just focus on the second and fourth question because somewhat they are related. I think from a budget funding perspective, it's clear that what you need is to focus on the core. You need few taxes that are well-designed that would assure government funding in the long term. And the usual suspects on which almost all countries rely, are income taxes and broad-based consumption taxes, and to some extent not very successfully certain forms of property or wealth taxes. If you don't have these in place, it's unlikely that picking and choosing on narrow tax bases, for whatever reasons, is going to work. It goes to the credibility of policymaking that if you can't actually have a good tax in place to fund government budget, that sugary tax is gonna do the trick. It just doesn't work like this. Then those taxes should be seen as complimentary and for other objectives. You mentioned climate, obviously, that's the elephant in the room because it's also about health and the base is bigger probably a little bit longer perspective because we can think of climate even after the hydrocarbon era.

The argument that this is good for health and this is good for revenue is just not good enough. You have to make that argument in the context of a solid fiscal policy on revenue mobilization and a solid health policy that we're really committed to health and taxes are just part of the equation. They're not the solver of the issue. They have to be part of a bigger strategy for health, including redirecting spending.

MASOOD AHMED:
Thank you. Emilia.

EMILIA SKROK:
So, I would say also combine a few of those. So, whenever we engage, we look comprehensively. So, you ask whether we are thinking about processed foods. Yes. And here are two experts working with me, so maybe they can give you some concrete examples. Of course, it depends on the size of the problem, level of development. But we try to look comprehensively on health-related taxation. And the same applies to spending part. So, my team put me in my talking points savings, don't forget about I forgot about it. But I think we are going to look at this also from how much you can save in the long term. It's of course much more difficult argument because we are also short-sighted, our budgets tend to be medium-term, but they are really not medium-term. So, that's much more difficult argument to make that this is going to come in the future and generate a lot of savings. But yes, we would look comprehensively. I agree on regulations and on the technology, how much this could also cause a problem in terms of advertising certain things, using AI to actually incentivize people to do things that we don't want them to do.

So, very much with you. In terms of win-win, I agree that I haven't seen the win-win, but again, maybe they can give you a better example. Thank you so much.

MASOOD AHMED:
Thank you, Emelia. So, Emelia, Mario, Emmanuel, thank you very much for your engagement, for your contributions. Thank you all for being here. Please join me in thanking our panelists. (APPLAUSE) (SOFT PIANO MUSIC PLAYS)