Health Earmarks and Health Taxes : What Do We Know?
Earmarking means taking all or a portion of total revenue from a tax or group of taxes and setting it aside or ‘protecting’ it for a designated expenditure purpose. Earmarking practices vary from ‘hard’ to ‘soft,’ and are associated with different...
| Main Authors: | , , , , , , , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/415911607500858658/Health-Earmarks-and-Health-Taxes-What-Do-We-Know http://hdl.handle.net/10986/34947 |
| Summary: | Earmarking means taking all or a portion
of total revenue from a tax or group of taxes and setting it
aside or ‘protecting’ it for a designated expenditure
purpose. Earmarking practices vary from ‘hard’ to ‘soft,’
and are associated with different levels of fiscal risk. At
least 80, and likely more, countries earmark for health.
However, earmarking is unlikely to bring a sustained net
increase in revenue due to offsetting and can create
rigidities and inefficiencies. If allocations fail to match
priorities or if a tax can make the priority more
politically acceptable, soft earmarks that are closer to
standard budget processes may be useful in the short term.
The primary intent of “health taxes” is to curb unhealthy
behaviors that affect population health and can strain
health systems. Health taxes can generate revenue without
compromising equity, and their revenues can be earmarked,
but they do not by design net more money for health. In the
context of fiscal constraints (e.g., with COVID-19), heath
taxes may provide an overall source of revenue for
governments and help manage disease burden and fiscal
pressure on the health system by reducing risk factors for
COVID-19. Soft earmarks on health taxes may also help inject
short-term funding into the health sector, if the
appropriate public financial management safeguards are in place. |
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