Health Taxes: Investing in Zambia's Health, Prosperity and Future

Walk into any trading centre in Zambia at dusk and you will find the same three products stacked within reach of a child's hand: cigarettes sold as singles, sachets of spirits, and sweetened drinks colder than the water in most homes. They are cheap, abundant and relentlessly advertised. Their real cost, however, is not printed on the shelf. It is paid later, quietly, in clinic queues, in lost wages, in the school fees a family can no longer find because a breadwinner fell ill.

Health taxes exist to close that gap between the price we pay and the price we bear. They are excise duties applied to products with a well-documented record of harm — tobacco, alcohol and sugar-sweetened beverages — and they work for a simple reason: when a harmful product becomes more expensive, fewer people start using it, more people reduce their use, and many stop altogether. Price is not the only lever a government holds, but it is the fastest-acting one it has.

The evidence behind that claim is unusually consistent for social policy. Across dozens of countries and several decades, a ten per cent rise in the real price of tobacco has been associated with roughly a four per cent fall in consumption in high-income settings, and as much as eight per cent in low- and middle-income countries, where household budgets are tighter and price sensitivity is higher. Comparable patterns appear for alcohol and for sugary drinks. The people most responsive to price are precisely those with the most to lose: the young, and the poor.

A tax on tobacco is not a tax on smokers. It is a subsidy for their children's future.

— Master Chimbala

That last point deserves careful handling, because it is where most public arguments go wrong. Critics say health taxes are regressive — that they take a larger share of income from poorer households. Measured only at the till, that is true. But a tax is not the only thing a household pays. Poorer families also carry the heaviest burden of tobacco-related cancers, alcohol-related injury and diet-related diabetes, and they carry it without insurance, without savings and often without paid sick leave. When price rises and consumption falls fastest in exactly those households, the long-run distribution of benefit runs the other way. The tax is regressive on paper; the health outcome is progressive in practice.

Then there is the revenue, and here Zambia should be more ambitious than it has been. Health taxes are among the few instruments that are administratively simple, hard to avoid, and politically defensible in the same breath. Excise is collected from a small number of manufacturers and importers rather than from millions of transactions. The revenue is predictable enough to plan against. And unlike most tax increases, this one can be explained to a citizen in a single sentence: we are charging more for the things that make us sick so that we can pay for the things that keep us well.

What that revenue funds matters as much as how much of it is raised. Money channelled towards primary care, cancer screening, mental health services, immunisation and community health workers turns an abstraction into something a voter can see. Several countries have gone further and earmarked a share of tobacco or alcohol excise for health promotion funds, ring-fenced from the annual scramble of the budget cycle. Earmarking is not a universal answer — finance ministries have legitimate reasons to resist it — but visible reinvestment is what converts grudging tolerance of a tax into public support for it.

Industry objections are predictable enough to anticipate in advance. The first is smuggling: raise the tax, we are told, and the illicit market will swallow the gain. The experience of countries that strengthened tax administration alongside tax rates suggests otherwise. Illicit trade is driven less by the tax rate than by weak enforcement, porous borders and untracked supply chains. Track-and-trace systems, secure tax stamps and cooperation between revenue and customs authorities address the problem directly; keeping taxes low simply hands the same market to the legal seller and abandons the health gain.

The second objection is employment. It rests on the assumption that money not spent on cigarettes disappears from the economy. It does not. It is spent on food, transport, school requirements, airtime and savings — sectors that in most economies employ more people per kwacha than the manufacture and distribution of harmful products. What changes is not the volume of economic activity but its composition, and the direction of that change favours households.

The deeper case, though, is not fiscal at all. Zambia's greatest asset is not its copper. It is a young population whose productive years stretch decades into the future. Every avoidable illness in that population is a subtraction from national capability — a teacher who retires early, an entrepreneur whose business closes during treatment, a mother whose household drops a rung it will take years to climb back. Prevention is the only health strategy that protects human capital before it is damaged, and health taxes are among the cheapest prevention instruments a government can deploy. They require no new hospitals, no imported technology, and no expansion of the health workforce to begin working.

None of this happens through the health ministry alone. A serious health tax agenda is a finance decision, a trade decision, a legal decision and a communication challenge at once. It needs Treasury to design an excise structure that keeps pace with inflation and income growth rather than eroding quietly each year. It needs Justice to defend the measures against challenge. It needs Health to show, publicly and repeatedly, what the money bought. And it needs civil society, faith leaders, teachers and journalists to hold the coalition together when the pressure comes — because it will come.

We already know what works. That is the uncomfortable part. The technical debate on health taxes was settled some time ago; what remains is the political will to act on a conclusion that is inconvenient for a handful of powerful interests and beneficial for everyone else. A country does not become healthier by accident, and it does not become wealthier while burying its most productive citizens ahead of schedule. Zambia can choose prevention now, at a price it can afford, or it can pay later at a price it cannot.