印度卫生税形势诊断（英）

D I S C U S S I O NP A P E RPublic Disclosure Authorized O C T O B E R2 0 2 4 Rijo M. JohnEdson C. Araujo A DIAGNOSTIC OF THE HEALTH TAXES LANDSCAPE IN INDIA Rijo M. JohnEdson C. Araujo Health, Nutrition,and Population (HNP) Discussion Paper This series is produced by the Health, Nutrition, and Population Global Practice of the World Bank.The papers in this series aim to provide a vehicle for publishing preliminary results on HNP topics toencourage discussion and debate. The findings, interpretations, and conclusions expressed in thispaper are entirely those of the author(s) and should not be attributed in any manner to the WorldBank, to its affiliated organizations, or to members of its Board of Executive Directors, or to thecountries they represent. Citation and the use of the material presented in this series should takeinto account this provisional character. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries,colors, denominations, and other information shown on any map in this work do not imply anyjudgment on the part of the World Bank concerning the legal statusof any territory or theendorsement or acceptance of such boundaries. For information regarding the HNP Discussion Paper Series, please contact the Editor, Jung-HwanChoi atjchoi@worldbank.orgorJuliette GuantaiatJguantai@worldbank.org. RIGHTS AND PERMISSIONS The material in this work is subject to copyright. Because the World Bank encourages thedissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercialpurposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World BankPublications, The World Bank Group, 1818 H Street,NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail:pubrights@worldbank.org. ©2023 The International Bank for Reconstruction and Development / The World Bank 1818 H Street,NW,Washington, DC 20433All rights reserved. Health, Nutrition,and Population (HNP) Discussion Paper A DIAGNOSTIC OF THE HEALTH TAXES LANDSCAPE IN INDIA Rijo M. JohnaandEdson C. Araujob aConsultant, World Bank, and Adjunct Professor, RajagiriCollege of Social Sciences, Kochi, IndiabSeniorEconomist, World Bank, Washington,DC,USA Abstract:The consumption of tobacco, alcohol, and sugar-sweetened beverages(SSBs)in India leads tosignificant public health and economic challenges, with 1.6 million deaths and 49.3 million disability-adjustedlife years lost annually. These products are major risk factors for noncommunicable diseases, responsible for64.9percentof all deaths in India as of 2019. India is the world's second-largest tobacco consumer, withdeclining but still a substantial 267 million tobacco users. Alcohol consumption has seen per capita increasesamong drinkers, and India leads globally in sugar consumption. The economic burden from diseases relatedto these products is considerable, with tobacco-related costs at US$36.2 billion annually and alcohol-relatedcosts at US$31.4 billion. Health taxes have been effective globally in reducing consumption and generatingrevenue while addressing market failures from negative externalities and internalities. India's current indirecttax system, involving anational-level Goods and Services Tax(GST)on tobacco and SSBs,as well asstate-level excise duties andvalue added tax(VAT)on alcohol, poses challenges due to its complexity andinconsistencies. Tobacco products are taxed under GST at 28percentwith additional cesses, but rates remainwell below the World Health Organization's recommendations,and its structure is highly complex. The GSTapplied on SSBs is not commensurate with the product’s sugar content. Excise duties and VAT applied onalcoholic beverages vary significantly across states. Reforming health taxes requires addressing theseinconsistencies, improving tax compliance, and introducing new tax structures based on the relative harm ofeach product. Empirical evidence on the effectiveness of health taxes in India is limited, particularly for alcoholand SSBs. Policy priorities includeincreasing specific excise taxes, replacing compensation cess with healthtax, simplifying the tax structure, regulating marketing practices, and detailed state-level analysis of alcoholtaxation to find a preferred taxation regime on alcohol. Keywords:Healthtaxes,tobacco,alcohol,sugar-sweetenedbeverages, India Disclaimer:The findings, interpretations,and conclusions expressed in the paper are entirely those of theauthors, and do not represent the views of the World Bank, its Executive Directors, or the countries theyrepresent. Correspondence Details:Edson C. Araujo,Senior Economist, World Bank,1818 H Street,Washington,DC,USATelephone:+ 202-290-8150;E-mail:earaujo@worldbank.org TABLE OF CONTENTS 1INTRODUCTION12WHY HEALTH TAXES MATTER32.1RATIONALE FOR EXPANDING HEALTH TAXES32.2HEALTH TAXES AS A FISCAL POLICY INSTRUMENT43THE CONSUMPTION OF UNHEALTHY P