Frequently Asked Questions (FAQs)
Find out policymakers’ common questions on health promotion and answered here.
Q: Why is a health promotion fund needed?
A: A health promotion fund addresses the need of securing sustainable funding for health promotion programmes including tobacco control. This budget line is often lower in the priority agenda and is under-resourced within the national budget. Setting up a health promotion fund is the most cost-effective strategy for the government to secure long-term funds for supporting health promotion and tobacco control activities.
Many countries have reaped enormous benefits from the establishment of a health promotion fund. These funds have been introduced in many parts of the world including Australia, Switzerland, Austria, and within Southeast Asia, Thailand and Singapore.
Q: The Ministry of Health (MOH) can request a larger budget for health promotion activities. Why is there is a need for another agency?
A: Gaining more funds to support health promotion and tobacco control through the conventional health budget system is difficult and largely unsuccessful. The annual health promotion budget in most countries is a very small percentage of the total expenditure for health and can vary dramatically from year to year. Programmes can also be subject to changes in policy direction from government to government. This does not allow for the necessary long-term action to achieve real population health gains.
Having a fund that is autonomous or semi-autonomous to a Ministry allows for greater flexibility particularly when establishing partnerships with other ministries and external agencies that are not directly affiliated with government institutions. The bureaucratic system in most governments requires many levels of approval and can result in delayed/disconnected programme implementation.
An additional fund sourced from the collection of tobacco and alcohol taxes to support health promotion is an effective and efficient way to promote health. For example in Thailand, the budget for the health promotion fund is only about 1-2% of the national health budget and is managed by an autonomous health promotion foundation. The Thailand Health Promotion Foundation has flexibility in terms of fund management and can support activities that are unlikely or difficult to conduct under a national health budgeting system.
Q: What is the difference between dedicated and surcharge tax?
A: The term “surcharge tax” refers to requiring the industry to pay a percentage of “additional tax” on top of the excise tax, while “dedicated tax” is tax that has been collected by the Ministry of Finance and is set aside for health promotion.
Q: Isn’t a surcharge tax counter to financial discipline and traditional practices?
A: A common argument against a surcharge tax is that this will set a precedent and may disrupt the country’s ‘financial discipline’ if more of such cases occur. An answer to this question can be found in the experience of Australia, where implementing a dedicated tax for health promotion did not set a precedent for other dedicated taxes to be set up.
The original proposal for the funding source of the Thailand Health Promotion Foundation was from “dedicating 2% of tobacco and alcohol excise taxes” that has been collected by the Excise Department from tobacco and alcohol producers. The Ministry of Finance opposed this proposal. This caused the fund’s setup committee to change the proposal for the fund to come from requiring the tobacco and alcohol producers to pay an additional 2% in excise tax (surcharge), so that the Ministry of Finance did not have to budget for the fund from the existing tax collected. This proposal was finally approved by all parties.
A surcharge or dedicated tax was not a ‘traditional practice’ in Thailand before the Thailand Health Promotion Act was enacted in 2001. See the Case Study in Box 1.
Box 1: Case study on Thailand’s defense for a surcharge tax
Thailand’s advocates for a health promotion fund defended the 2% surcharge (i.e. 2% additional excise tax), to fund a health promotion foundation, (leading to the setting up of the Thailand Health Promotion Foundation – ThaiHealth) by using the following points:
Health promotion programs including tobacco control requires collaborative partnerships with both government and non-government sectors. Health promotion foundations support inter-sectoral action and inter-organizational partnerships at all levels and engage the community in planning and decision-making. These inter-sectoral relationships are more difficult for government Ministries to establish.
Most health promotion programs are innovative and strategic, with some requiring a level of experimentation or risk. Not all government Ministries are comfortable with risk.
The health financing system is focused primarily on health care services and treatment/service based health promotion, with much less attention to health promotion programs for improving population health.
A health promotion fund is used to support the advocacy and implementation of government health-related policies and priorities. The organization or agency that is established to manage the fund is accountable to the government and thus no different from other government agencies.
The source of funding, derived from a surcharge tax on tobacco and alcohol products and collected directly from tobacco and alcohol producers, and its dedication to health promotion fund is the unique component. Without a surcharge tax, governments will have fewer preventative programs and will have to meet increasing health care costs out of general revenue.
The health promotion fund while governed by an independent board or committee is audited by designated government agencies and reports annually to Parliament.
Another way to engage policy makers who oppose a dedicated or surcharge tax to fund health promotion is by asking, “What other alternatives do we have? Either we retain the existing financial process/discipline, which neglects health promotion, and face the consequences of a growing healthcare burden, or we impose a surcharge tax on the industry, with the opportunity to gain additional government revenue to fund health promotion”. In other words, we have to weigh the benefit of improving health and saving lives against preserving financial discipline.
It is important to reinforce that the tax is used to support short-, medium-, and long-term health promotion and tobacco control programmes. As a result, the health and well-being of the public will improve, while health care expenditures will decline over time.
Q: Wouldn’t a surcharge tax place further burdens on the tobacco/alcohol industry?
A: Imposing a surcharge tax, dedicated to health promotion and tobacco control, on products that have harmful health effects to users should be considered a legitimate action taken by a responsible government to improve health and decrease healthcare costs.
It has been demonstrated that the overall impact on the industry is very small, as these are for two highly profitable industries. The amount of additional tax intended for health promotion is only a fraction of the total taxes that the industry pays, and an even smaller fraction of their profit.
Taxes on tobacco and alcohol need to be increased regularly to keep pace with inflation. Any increase in affordability of these products can increase consumption rates, which will result in negative health outcomes.
Q: Many existing funds do not work well, why another one? How can we guarantee that this fund will work?
A: This argument arose in Thailand where there are many types of funds, which are mostly small and are also trying to generate secure funds. Most of these funds are set up within government portfolios, and are created for services or charity purposes. Most of these funds are established by executive order or decree and do not have oversight by the public or other auditing agencies. This potential lack of transparency in the use and administration of many of the existing funds is to be avoided.
Health promotion funds do work. Australia, Switzerland, and Austria are just three examples of countries that have long standing and effective health promotion funds.
The fund should be bound by clear legislation that stipulates:
- a) the objectives of the fund
- b) the sources of funding
- c) the means of administering the fund; and
- d) the processes for transparency and accountability.
These specifications ensure the security, transparency, effectiveness, and sustainability of the fund.
Q: Why should tobacco and alcohol tax be used to address problems caused by other risk factors?
A: Tobacco and alcohol taxes are already being used for multiple purposes. Existing tobacco and alcohol taxes go to general revenue, combining with other taxes and government revenue. This general consolidated revenue is then allocated to various government ministries and departments.
Using these taxes to directly fund health promotion is appropriate. Tobacco and alcohol products impair health, whereas health promotion activities can reduce the harm and improve health.
Q: How do we know the size of the budget for a health promotion fund?
A: Initially, the proposed budget for ThaiHealth was one percent (1%) of the government’s annual health budget. This figure was used as a tactic to convince policy makers to support a health promotion fund.
One percent (1%) of the national health budget may not actually be enough for a robust health promotion programme, but it is sufficient to fund projects aimed at controlling major non communicable disease risk factors. A proposal for a higher percentage of tax can be made, but this has to be balanced against political acceptability.
In 2011, the budget of ThaiHealth was USD100 million, representing only 1.07% of the government’s annual health budget.
Q: What were the arguments that convinced a positive decision in the parliament?
A: The consumption of tobacco and alcohol products has serious negative social and economic impacts on society. Most of these adverse impacts become the responsibility of government, such as increasing health care costs associated with illness, chronic disease accidents and crimes. As governments collect a large amount of taxes from tobacco and alcohol products, they have an opportunity and moral responsibility to lessen these impacts by funding health promotion programmes including tobacco and alcohol control.
In the case of Thailand, when the Thai government was proposing a bill on universal health care (insurance) coverage, advocates for the health promotion bill were able to support both initiatives by arguing they were synergistic. The health promotion fund would help reduce the long-term costs that universal health coverage system would incur. If the escalating health care costs were not reduced through health promotion and preventative actions, government will have to face with very high health care budget.
As a small surcharge tax on tobacco and alcohol is paid by the industry on top of the existing excise tax it pays, the government has a net gain using an efficient and existing collection mechanism. The full amount of excise taxes is collected by a finance ministry and, at the same time, the extra surcharge tax is directed to the health promotion fund.
An increase in taxes and product prices is a very effective health promotion strategy in itself as it saves lives and governments’ money by dampening tobacco and alcohol use, which overtime will decrease the disease burden and health care expenditure.
The surcharge for the fund also provides adequate and sustainable funding for a broad range of health promoting initiatives that would continue to bring immediate and major benefits to a community.
Q: Who should be the one driving the process for setting up a health promotion fund?
A: A coalition of advocates and experts who are committed to promoting population health through an autonomous/semi-autonomous agency with a sustained funding source is required. This may include tobacco control advocates, health system experts with public health and health promotion knowledge, finance experts, and technocrat politicians.
Q: How will we know if the public will support the establishment of the health promotion fund?
A: In Thailand, a public poll revealed that the general public strongly supported the government’s proposal to set up a health promotion fund funded by additional tobacco and alcohol taxes that focused on tobacco and alcohol control, road safety, exercise, and nutrition. The poll also showed that civil society and non-governmental organizations fully supported tobacco control and other health promotion initiatives.
Q: How do we find evidence supporting the establishment of a health promotion fund?
A: There is a range of evidence that can support the case for establishing a health promotion foundation. Seek out:
- Information and statistics on the disease burden of major noncommunicable diseases, including total health care costs of treating those diseases.
- The current budget for health promotion and tobacco control in the country.
- Examples of health promotion foundations established in other countries; and
- The recommendation stated in Article 26 of the WHO FCTC: “each Party shall provide financial support for its national activities intended to achieve the objectives of the convention”.
Q: Is now the right time to set up a health promotion foundation?
A: Most countries are now committed to strengthening national efforts in the prevention and control of non-communicable diseases. This increased need to secure financial support to implement non-communicable disease prevention is an excellent opportunity for health promotion fund advocates. Article 26 of the WHO FCTC requires all parties to secure and provide financial support for the implementation of various tobacco control programmes and activities to meet the objectives of the Convention.
In addition, Article 6 of the WHO FCTC recommends that Parties dedicate revenue to support tobacco control and other health promotion programmes.
Experience has shown that there will never be adequate external sources of funding to address non-communicable disease control for a particular low- or middle-income country. Donors generally support or fund ‘pilot’ or ‘innovative’ projects for a defined period of time, particularly in projects and programmes that interest them but that may not necessarily be the recipient country’s priority.
Financial resources for health promotion are already available in each country regardless of economic status, but a mechanism that secures those resources to fund health promotion and tobacco control is what is now required.
Tobacco and alcohol products are mostly under-taxed in developing countries and countries in economic transition. Increasing taxes on these two products and setting aside a dedicated portion to fund health promotion is the most viable solution to address the issue of lack of resources/funding. The Thailand Health Promotion Foundation is one of the models that should be considered by other countries.
Vathesatogkit P, Yen Lian T, Ritthipakdee B. (2013). Health Promotion: Sustainable Financing and Governance. Bangkok, Thai Health Promotion Foundation (ThaiHealth).