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tobacco products.
They tried to figure out the highest possible taxes that they could impose on these products without pushing consumption down too much, to a level where the gross collection of taxes on these products would actually fall despite the higher tax rate.
Generally, the public was far more ready to see taxes rise on these products, so the finance ministers were able to largely ignore the adverse comments and simply set their taxes at the rates they thought would create the largest gross return.
This sort of freedom was rarely granted other taxes where the level of complaints over higher tax rates was usually far too great to admit more than minor adjustments. But so far as “sin taxes” were concerned the only limit was the desire to extract as many golden eggs as possible without killing the golden goose.
Then health ministers started contributing to the debate. They had noticed the modest temporary falls in consumption when taxes on alcohol and tobacco were raised, and although when these tax raises were pure revenue driven the consumption did rebound.
But the bigger the tax rise the longer it took for the consumption to rebound and sometimes it never did if the finance minister overdid it. So the idea of using taxes not so much to raise revenue but to do public health engineering took root.
Tobacco taxes have taken the brunt of this concept; they have been pushed fast and furious in many countries in order to make smoking expensive, especially for young people just starting out. The idea is to prevent as many new smokers as possible taking up the habit.
The actual number of more mature smokers who give up is far smaller than the number of potential new smokers who never start, so there are some limits on how fast the taxes can be raised. But governments have shown a willingness to push tobacco taxes up to levels where the gross revenue from such taxes falls as the supply of smokers dries up.
Alcohol taxes were the next to be used for public health purposes. Generally, most governments have been pushing up taxes on spirits far more than taxes on beers and wines, simply because these have lower levels of alcohol and, in moderation, are not a health risk.
Some countries do, though lump all alcohol together, but others do try and separate out the drinks with high alcohol levels from those with the lower levels.
Now Zimbabwe’s Health and Child Welfare Minister Dr Henry Madzorera wants to use the same tax tools to reduce consumption of alcohol and tobacco.
In one area Zimbabwe is, perhaps, hypercritical. Farmers are encouraged by the agricultural and economic ministries to grow tobacco while the health ministry battles to reduce the number of Zimbabwean smokers.
Economically, there is not much danger of an agricultural collapse from a drop in Zimbabwean tobacco consumption. Only one or two percent of the crop is consumed locally, with almost all Zimbabwean tobacco exported.
Anti-smoking measures in Zimbabwe therefore have little effect on the economics of tobacco growing although anti-smoking measures in our main export markets obviously do. We have already seen orders from Europe fall, although the growing wealth of Asia, and the almost insatiable desire of many Asians to smoke, are providing alternative markets.
But Zimbabwe cannot rely for ever in the 21st century on foreigners wanting to smoke. So the tentative ideas by the United Nations that tobacco farmers should be helped with alternative crops is welcome, not so much to dry up supplies but to allow our farmers to cope as demand falls.
So, to a degree, it is simply a matter of electoral politics when tobacco taxes are set. Smoking is now rare among younger Zimbabweans. Many might have the odd cigarette as an experiment but heavy smoking and habitual smoking have almost died out among those under 30. Generally, smoking is not socially acceptable among the younger generations.
It is more tolerated in the older age groups, although less than it was.
So while we see Dr Madzorera’s point, higher tobacco taxes are not likely to do much more than accelerate a trend that already exists. They can be applied, but he should not hope for too much in the way of results; there are not many heavy smokers left and very few youngsters joining their ranks.
Alcohol taxes, smartly applied, could help sensible drinking.
We think that lower tax rates on beer and wine than on spirits is a concept worth pursuing, and we would even go further and urge the minister to think about pressing for differentials even at the beer and wine levels.
In more and more countries brewers are seeing rising sales of “light” beers and even alcohol-free beers. Strict enforcement of driving laws has helped, as motorists look for something that allows them to join in a social occasion without losing their licence, but the thinking drinker is also worried about his or her health.
Health experts seem to agree that modest intakes of alcohol are not dangerous, except for the small minority with a predisposition to alcoholism, but anything more than a few drinks a week can be dangerous.
So here we hope Dr Madzorera will press for smart taxes, ones that do not do much to hit the ordinary person who likes the odd beer with his or her friends, but which will help to discourage those who feel that consuming a bottle of spirits in an evening, or who like getting drunk on fortified beverages, is the only way to cope.
In other words public health concerns have to be taken into account; but let him not be a total killjoy.
Online Reporter