Govt mulls levying ‘sin taxes’

Source: Govt mulls levying ‘sin taxes’ | The Herald

Paidamoyo Chipunza Senior Health Reporter—
Government is considering introducing taxes on harmful products like alcohol and cigarettes to increase domestic financial resources for health, amid reports that the country requires about $7,6 million between 2015 and 2020 to improve national health service provision. Addressing delegates at the Community Working Group on Health’s 23rd annual meeting in Harare recently, planning and donor coordination officer in the Ministry of Health and Child Care Mr Gwati Gwati said current financial resources towards health fall short of national needs.

“Full implementation of the National Health Strategy (NHS) requires resources beyond what Zimbabwe can afford. The Ministry of Health and Child Care will face tough decisions in prioritising different services induced in the NHS and work on generating domestic resources for health.”

Mr Gwati said the country must consider introducing “sin taxes”. According to Government’s policy brief on domestic financing produced in May last year, taxing cigarettes, beer, wines and spirits has a potential to raise at least $20 million annually by 2022.

Another option on mobilising domestic funding is introducing a once-off 5 percent addition to the existing fuel levy, which could raise about $14 million in a year — capital that could also be invested for emergencies such as road traffic accidents.

Other international examples Government is looking at include earmarking either one or two percent of Value Added Tax (VAT) for health, which could raise between $100 million to $200 million a year. Mr Gwati said these initiatives were projected to raise sufficient funds to cover all financial deficits that could hinder universal health coverage by 2020.

“For both 2015 and 2016, the total budgeted funding per capita falls short of the newly recommended figures of $86 per capita for provision of priority services,” said Mr Gwati. In 2015, Zimbabwe’s per capita allocation was $70, $16 less the new recommendation, while this year it stands at $65.

“This resource gap is also underestimated considering that not all budgeted funding will be disbursed and some funding will go towards overheads and operations,” said Mr Gwati. He said while non-communicable diseases such as cancers, respiratory infections and environmental health associated diseases such as diarrhoeal outbreaks were major causes of deaths in health institutions, they received little funding.

He said several programmes received a majority of their funding from external funders, leaving those programmes at risk of sustainability if external funding ends or priorities shift. Mr Gwati said introducing community health insurance schemes and ensuring that Government allocates 15 percent of its national budget towards health were also vital in ensuring enough funding for health.

“Domestic resources support systems cost while donor support programme costs such as drugs and commodities. In 2015, 65 percent of Government and local authority funding went towards salaries and benefits while 38,5 percent of the donor funding went towards medicines and other commodities,” he said.

Government and local authorities provided about $426 million during 2015 while donors and other external funders provided about $511 million. The Community Working Group on Health executive director Mr Itai Rusike said while domestic funding was skewed towards salaries and benefits, Government should also consider “sin taxes” as a way of discouraging people from consuming harmful substances.

“The proposal to introduce earmarked sin taxes to fund health need to be followed through,” said Mr Rusike. He said there was also need by Government to fulfill its regional commitment to allocate at least 15 percent of its national budget towards health to ensure increased domestic resource mobilisation.

“Reaching the Sustainable Development Goals (SDGs) targets requires a sustainable momentum in financing our health care system. While progress has been made in improving our health indicators, there is need to sustain the momentum in domestic health financing,” Mr Rusike said.