Some of the world’s leading civic, health and economic leaders are hoping to tackle one of the most pressing global health issues by turning to an often-overlooked tool—fiscal policy.
A new task force announced Thursday will include finance ministers, central bankers, global health experts and economists to explore how excise-tax policy can discourage people from using products that contribute to so-called noncommunicable diseases—such as diabetes, cancer and chronic respiratory illness—which are the leading cause of death in the world.
Former Treasury secretary and National Economic Council director Lawrence Summers is co-chairing the coalition along with Michael Bloomberg, who as mayor of New York City spearheaded one of the most high-profile efforts to tax sugary beverages.
We spoke with Mr. Summers about the new initiative, why fiscal policy and health policy go hand in hand, and whether such efforts, which have faced considerable public push back, actually work to improve health outcomes.
Q: Why is fiscal policy such an important tool when it comes to addressing these major health issues?
A: Just in pure fiscal policy terms, you’ve got to raise revenue for the government, and it’s got to be better to tax “bads” than to tax “goods.” We want to discourage people from killing themselves from smoking, and we want to encourage people to work and save.
So why not tax tobacco more heavily and tax working and saving less heavily?
The second thing is the world is going through a huge health transition, where the problems of the six billion people who live in emerging markets are increasingly the problems of the one billion who live in rich countries. For the first time in human history, there are more people suffering from eating too many calories than there are suffering from eating too few.
Much more broadly…we’re seeing a convergence in the nature of health problems toward so-called NCDs, noncommunicable diseases—cancer, heart disease, diabetes—rather than communicable.
Third, increasingly what we’ve learned is that prevention beats a cure. It’s probably less painful, in the fullness of it all, to resist cigarettes than it is to have open-heart surgery. And it’s certainly much cheaper for the society of which you are a part.
And we’ve increasingly seen that because of social multipliers and because of behavioral economic considerations, taxes are more potent than we otherwise would have supposed. I see it all the time when we go out to dinner with friends. Nobody wants to be the only person to have dessert. So if you start discouraging it, there’s a multiplicative effect where other people are discouraged.
Q: What exactly will the task force be doing?
A: We’ve commissioned a variety of white papers and studies, so I think we’ll have estimates of potential life-saving gains worldwide and the translation of those life-saving gains worldwide into economics.
I think we’ll have guidelines and recommendations for countries and finance ministers who are interested in moving in this kind of policy direction. So I think the functions are advocacy, analysis and implementation, and we’re hoping to contribute in all three areas. And they’re obviously related in the sense that credible advocacy has to be based on strong analysis.
Q: I would assume part of this initiative is trying to win public support for these ideas, which have faced a lot of pushback. Do you think there’s a public perception hurdle? People might say they don’t like the idea of a soda tax, they don’t want to be told what to do, but what has the evidence shown so far?
The evidence is pretty unambiguous that these taxes decrease in a substantial way, in some cases by as much as 50%, purchases of sugary drinks. I think the evidence linking—and this is the kind of evidence we’ll be linking in the white papers we’re commissioning—sugary drinks, when you reduce their consumption, the evidence is overwhelming that it operates to improve health and lengthen life expectancy.
People do have this “nanny state” concern, and I think my response…would be, you’ve got to raise taxes on something. So deciding to do it on “bad” rather than “good” is not a nanny state–it’s just common sense.
There are these externality spillover aspects, both in the case of tobacco, because you breathe the stuff, and in the case of other things because my behavior influences yours—the “how many people are going to order dessert” aspect.
Q: Given the current political climate at the federal level, where do you think the most opportunities exist for these policies? At the state and local level? In other countries?
A: I’ve warned in general that the transition from inconceivable to inevitable can be very fast. We may have a very different political climate after next November than we do today. We may have an even more different political climate in two years and 10 months from now.
There are a lot of opportunities in the developing world. State and local governments are making a lot of these decisions, and there are certainly state and local governments that are potentially interested.
The main orientation of this commission is toward the global issues—governments all over the world. I think we’re more oriented toward lower- and middle-income countries.
A: When will we start to see work from the task force?
We’ll probably start to see background papers in the next several months.
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from Real Time Economics http://ift.tt/2DljnQO
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