Government seeks tax hike on tobacco, alcohol to fund health

Okwe Obi, Abuja

Minister of Health Isaac Adewole on Tuesday canvassed for increased consumption taxes on harmful products like alcohol and tobacco, saying the monies realised could be used for funding healthcare in the country.

He also stated that the country has the lowest health budget globally, lamenting that the Federal Government has not invested substantially in the sector.

Speaking at ThisDay Newspapers Healthcare Financing Policy Dialogue, in Abuja, he said in 2016, the government health expenditure was 0.6% as a share of GDP or just $11% per capita, stressing that below regional and lower middle-income averages and the recommended $86% per capita for low and middle-incomes, Nigeria’s benchmark needed to deliver a limited setback for key health services.

Adewole explained that because of limited government and pooled health financing, spending on health was dominated by out-of-pocket (OOP) expenditures.

“As a result, OOP spending accounts for 75.2W% of total health expenditure-among the highest in the world –and 25% of households spend more than 10% of their household consumption health; a sign that more people are prone to poverty traps if they fall ill, for a country of our size this is not acceptable”, he stated.

He also added that at “4.8% as a share of GDP, Nigeria has one of the weakest revenue mobilization efforts in the world, with resultant implications for government’s effort towards financing sectoral projects.

“As you may know, tax revenues depend on four factors: the tax base, the tax rate, administrative efficiency and compliance,” he added.

On the creative funding of the health sector, he said: “In the issue of tax rate, 5%, our Value Added Tax is one of the lowest in the world and there are opportunities to expand this by increasing taxes on the consumption of harmful products such as alcohol and tobacco. In particular, our tobacco excise rates of 20% are well below the 75% World Health Organization benchmark.”

The minister called on states to invest in the health sector rather than allowing the Federal Government shoulder the responsibility, while commending the Edo state government for its quick response to the recent outbreak of Lassa fever in the southern state.