Does taxation on harmful products influence population health? Evidence from Africa using the dynamic panel system GMM a

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Does taxation on harmful products influence population health? Evidence from Africa using the dynamic panel system GMM approach Mustapha Immurana1   · Abdul‑Aziz Iddrisu2 · Micheal Kofi Boachie3 Accepted: 19 September 2020 © Springer Nature B.V. 2020

Abstract Products such as tobacco and alcohol are known to be deleterious to human health. Tobacco use for instance, causes over eight million deaths annually worldwide. This has necessitated the imposition of taxes on such harmful products aimed at reducing their demand and hence ensure enhanced population health. However, while the effects of such taxes on deaths related to the consumption of these products have been given much attention, very little attention has been given to how these taxes enhance overall population health beyond these related deaths. Using tobacco tax as a proxy for taxation on harmful products and life expectancy as a proxy for overall population health, this study, examines the effect of taxing harmful products on population health in 38 African countries from 2008–2018. The system Generalized Methods of Moments (GMM) regression is employed as the empirical estimation technique. The findings of the study show that, taxing harmful products enhances population health both in the short-run and long-run periods. The implication is that, governments, especially those in Africa, can use taxation on harmful products to improve population health even beyond deaths related to the consumption of these products. Keywords  Population health · Taxation on harmful products · System GMM · Africa JEL Classification  I18 · C33 · H25 · O55

* Mustapha Immurana [email protected]; [email protected]

Abdul‑Aziz Iddrisu [email protected]; iddrisu.abdul‑[email protected]

Micheal Kofi Boachie [email protected] 1

Institute of Health Research, University of Health and Allied Sciences, Ho, Ghana

2

Banking Technology and Finance Department, Kumasi Technical University, Kumasi, Ghana

3

School of Economics, University of Cape Town, Cape Town, South Africa



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Abbreviations FCTC​ Framework convention on tobacco control IARC​ International Agency for Research on Cancer SDGs Sustainable development goals WHO World Health Organization GMM Generalized methods of moments

1 Introduction Products such as tobacco and alcohol are considered harmful to human life because they contribute immensely to deaths worldwide. For instance, tobacco use alone causes more than eight million deaths globally every year (WHO 2019a). Also, on an annual basis, about three million of deaths that occur globally can be attributed to alcohol use. Moreover, ­harmful1 alcohol use is seen as a major cause of over 200 injury and disease conditions. Additionally, it is estimated that, 13.5% of all deaths among people aged 20–39 years are due to alcohol (WHO 2018a). Globally, there are 1.1 billion smokers, of which 80% are found in low- and middleincome countries. Thus, tobacco use may worsen the poverty situation in most of these econo