Low Rates of Tax in Tobacco and Alcohol in Nepal As Study Shows

Globally, taxes on tobacco, alcohol, and junk food have been employed to decrease consumption of these items, as reported by the World Health Organization (WHO). A recent study led by a researcher from Penn State College of Health and Human Development has uncovered reasons for the persistently low taxes on tobacco and alcohol in Nepal, a lower-income country with high smoking and alcohol consumption rates.

Yubraj Acharya, associate professor of health policy and administration at Penn State and the study's lead author, stated that "industry misinformation and unclear tax regulations present significant obstacles to implementing higher taxes on tobacco and alcohol in Nepal." Despite this, he believes that with enough political determination, it is feasible to increase these taxes since the nation has executed other major reforms in recent years.

This research is one of eight studies funded by the WHO to investigate barriers to imposing higher taxes on tobacco, alcohol, and sugary drinks in low- and middle-income countries. Although the WHO advises a 75% tax rate on tobacco products' retail price, Nepal's tobacco tax stands at 15.5%. Alcohol taxes vary according to beverage type but are also lower compared to other nations. Acharya collaborated with Nepalese researchers to conduct comprehensive interviews with 45 stakeholders across all seven provinces in Nepal regarding alcohol and tobacco taxation. They interviewed government officials, producers, distributors, retailers of alcoholic beverages and cigarettes, consumers, and civil society organization representatives to gather diverse viewpoints.

According to Acharya, during interviews industry representatives argued that increased taxes would be unfair or unfeasible. They alleged that higher taxation promotes cross-border smuggling while influencing lower-income consumers to switch to inferior-quality products. However, Acharya pointed out that higher taxation in India resulted in the anticipated decrease in cross-border sales. Additionally, if necessary, he suggested applying higher taxes on low-cost products should people switch.

Despite industry representatives asserting that taxes would not curb consumption or that elevated taxes would cause "economic chaos" by destroying the tobacco and alcohol industries, Acharya maintains that reliable evidence supports the effectiveness of higher taxes in reducing consumption. Similar misinformation tactics are employed by companies selling harmful products worldwide to undermine regulation efforts.

Acharya found it most troubling that many Nepalese government officials echoed the claims made by tobacco and alcohol industry representatives. This is attributed to the substantial economic power exercised by these corporations, as they finance political campaigns and wield considerable influence over policy-making. Furthermore, the researchers discovered that by clarifying and simplifying tax regulations, tax collection and enforcement could be optimized in Nepal. For instance, a more uniform approach to taxation and tax collection mechanisms for various tobacco products was proposed, as some products are taxed based on length whereas others on weight.

Acharya suggests that allocating a fixed percentage of health tax revenue towards addressing health issues related to tobacco and alcohol usage could boost transparency and garner support. The primary objective of this research is to reduce the occurrence of illnesses such as lung cancer, liver disease, kidney disease, and other non-communicable diseases that can result from or be exacerbated by smoking and drinking habits.

In 2020, Nepal witnessed a significant increase in smoking-related fatalities, accounting for over 19% of deaths compared to just 10% in 2010, as reported by the World Health Organization. Acharya warned that enhancements in cause-of-death reporting in one of Asia's poorest countries may contribute to the rise in such deaths. However, he also stressed the urgent need to reduce smoking and alcohol consumption and to utilize tax revenues to tackle the health impacts of these habits for the betterment of Nepal's future.

Acharya pointed out that while this research shows a global issue with alcohol and tobacco causing health problems worldwide, local contexts and cultures are essential considerations. He believes that studies like this one, funded by the WHO in low- and middle-income countries, can help build a robust knowledge base to fight misinformation and promote health.

Expressing optimism, Acharya hopes forthcoming research will aid Nepal in its journey towards fostering a healthier society. Education was severely restricted in the country until the late 1950s when the first public university emerged, leading to a gradual increase in education levels.

With rising education levels and widespread access to mobile phones in recent years, there is an opportunity to disseminate accurate information. According to Acharya, this allows officials and researchers to modify behaviors affecting health, including smoking and alcohol consumption. Acharya also mentioned that in 1960, 40% of people in the United States were smokers, but this number fell to just 12% by 2021 due to effective messaging and government policies. He believes that similar progress can be achieved in low-income settings like Nepal with thorough research, suitable policies, and thoughtful communication.