The globalisation of sin taxes
The FCTC is a revealing exemplar of the unaccountable global quangocracy
Sin taxes are a favourite tool of politicians and civil servants keen to extract revenue in order to change behaviour. The obvious two are alcohol and tobacco taxes, but others abound. They are sometimes controversial, as those who pay the taxes feel that they are at the sharp end of a moral agenda, given that demand for such products tends to hold up even under disproportionately high price increases (known as demand inelasticity).
But few people recognise the now permanent international reach of nannying technocrats. The World Health Organisation’s Framework Convention on Tobacco Control (FCTC), introduced in 2005, sent sin taxes global. Commonly regarded as one of the World Health Organisation’s main achievements of the 21st century, such taxes tend to be regressive and wherever they are implemented.
Tax increases are a crucial element of the FCTC. Article 6 commits signatories to implement “tax policies and, where appropriate, price policies, on tobacco products so as to contribute to the health objectives aimed at reducing tobacco consumption”. Prior to the FCTC, only 13 countries reached the WHO’s ‘best-practice’ standard of tobacco taxes totalling at least 75 per cent of retail prices, but by 2019 that number climbed to 39.
In the UK and abroad, sin taxes hit the poorest hardest. In July this year, the ONS revealed that the bottom quintile of households spent 2.1 per cent of their disposable income in tobacco duties, compared to 0.7 per cent for all households. That’s a significant increase on the previous year, when the lowest quintile spent “only” 1.3 per cent — but still far higher than the typical household.
Since the FCTC came into effect in 2005, tobacco duties in the UK have risen dramatically. In 2011 the UK introduced a “duty escalator” which automatically increases tobacco taxation by a growing percentage above the rate of inflation every year, and recently the government announced that this rate will increase even faster for hand-rolled tobacco products.
The UK bankrolls the FCTC
The UK bankrolls the FCTC. From 2017 to 2020 the government spent no less than £16.2 million in aid to “promote implementation of the FCTC in low and middle income countries”. The UK also pays a compulsory “assessed contribution” to the FCTC which amounts to hundreds of thousands of pounds per year. Of the £16.2 million, a few hundred thousand was spent “providing financial and/or technical support to Colombia” in implementing the FCTC tobacco rules. There, tobacco duties on cigarettes had already tripled in just a couple of years in line with FCTC recommendations.
Nonetheless, since the 2018 reforms efforts to increase tobacco taxes in Colombia have been defeated. Now, the Colombian government is moving towards taxes on heated tobacco products encouraged by the WHO’s stubborn refusal to recognise that they are less harmful than the real thing. Until now, the WHO has not called for signatories to ban the products but nor have they objected to bans. This decision points to a crucial failing of the multilateral order when it comes to health. Costless solutions to tobacco-related illnesses have presented themselves with a host of new products supported by domestic health authorities, but quangocrats have let a win-win for health and personal choice slip through their fingers. Remember, the UK’s public health advice continues to state that vaping is 95 per cent safer than combustible cigarettes, and there is a distinct category for heated tobacco duty.
The FCTC is WHO’s only international treaty, which shows that the WHO is inordinately focussed on lifestyle issues. Despite floundering during successive pandemics and offering faulty advice even on the most mundane issues, there are constant calls to extend its remit. In early 2023, a group of academics and campaigners working with the Cancer Council Australia called for e-cigarettes to be covered by the FCTC. The FCTC has also inspired other calls for health treaties, like a call published by the BMJ for a global treaty to tackle obesity.
The FCTC is a perfect example of the misguided nature of a far-too-powerful and unaccountable global quangocracy. While costless solutions to health problems caused by tobacco smoking present themselves, the WHO remains committed to promoting — and crucially, extending — sin taxes which punish the poor worldwide.
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