Journal Article

The distributional effects of tobacco tax increases across regions in Mexico: an extended cost-effectiveness analysis

Essue, Beverly M., Reynales-Shigematsu, Luz Myriam, Maldonado, Norman, Saenz-de-Miera, Belen, Wu, Daphne C., Jha, Prabhat

2022

Overview

Background Several studies have shown the beneficial effects of tobacco fiscal policy, but distributional effects have been less examined, especially at the subnational level. The objective of this study is to analyse the distributional effects of a one-peso tobacco tax increase (roughly equivalent to tripling the current excise tax) on health, poverty, and financial outcomes at the subnational level in Mexico. Methods We employ an extended cost-effectiveness analysis that estimates life-years gained, smoking attributable deaths averted, treatment costs averted, number of persons avoiding poverty and catastrophic health expenditures, and additional tax revenues by income group across five regions. Results With the one-peso tax increase (or 44% price increase), about 1.5 million smokers would quit smoking across the five regions, resulting in nearly 630 thousand premature deaths averted and 12.6 million life years gained. The bottom income quintile would gain three times more life years gains than the top quintile (ratio 3:1), and the largest gain for the most deprived would occur in the South (ratio 19:1), the region with the highest poverty incidence. Costs averted and additional tax revenues would reach 44.6 and 16.2 billion pesos, respectively. Moreover, 251 thousand individuals would avoid falling into poverty, including 53.2 in the lowest income quintile, and 563.9 thousand would avoid catastrophic health expenditures. Overall, the bottom income group would obtain 26% of the life years gained and 24% of the cost averted, while only paying 3% of the additional tax revenue. Conclusions The most significant gains from a substantial cigarette price increase would be for the poorest 20%, especially in the South, the most impoverished region of Mexico. Therefore, tobacco taxes are an opportunity for governments to advance in equity and towards the achievement of sustainable development goals on non-communicable diseases.

• Publisher: BioMed Central,BioMed Central Ltd,Springer Nature B.V,BMC
• Subject: Analysis / Chronic obstructive pulmonary disease / Cigarettes / Cost analysis / Cost-Benefit Analysis / Costs / Deaths / Distribution / Distributional effects / Economic aspects / Equality and Human Rights / Excise tax / Excise taxes / Expenditures / Fatalities / Fiscal policy / Health aspects / Health care expenditures / Health Policy / Health Promotion and Disease Prevention / Health Services Research / Health status / Humans / Income / Income taxes / Infectious diseases / Life / Low income groups / Lung cancer / Medicine / Medicine & Public Health / Mexico / Mexico - epidemiology / Mortality / Poverty / Premature mortality / Prices / Public Health / Regions / Revenue / Smoking / Smoking cessation / Smoking cessation programs / Social aspects / Social Justice / Social Policy / Subnational / Sustainable development / Tax increases / Tax revenues / Taxation / Taxes / Tobacco / Tobacco Products / Tobacco taxation / Treatment outcomes