Group says Nigeria requires coalition for effective health tax policy  

The Development Governance International (DGI) Consult says that Nigeria needs a unified coalition among health stakeholders for a functional health tax policy.  

Speaking in Abuja on Wednesday, Managing Partner, DGI Consult, Dr. Gafar Alawode,  stressed the necessity of forging a robust coalition to bolster the implementation of a functional health tax policy. 

This call to action comes in the wake of a comprehensive health policy analysis conducted by DGI in collaboration with the Alliance for Health Policy and Systems Research and the Federal Ministry of Health and Social Welfare.  

The session aimed to disseminate the methodology, findings, and pivotal recommendations derived from the analysis. 

The proposed coalition for health tax policy  

Key among the recommendations is the establishment of an inclusive coalition that rallies behind health taxes, supported by the development of a localized database to monitor consumption patterns.  

• Such data would furnish decision-makers with empirical evidence crucial for shaping effective health tax designs. 
• Highlighting the inherently political nature of crafting and implementing health tax policies, Dr. Alawode emphasised the importance of pre-empting misleading narratives that could undermine the initiative.  
• He further advocated for the maintenance of a dynamic database to track consumption trends and gauge the efficacy of tax rates, facilitating necessary policy adjustments. 

Dr. Robert Marten, a unit head at the Alliance for Health Policy and Systems Research, stressed the imperative of understanding the global political economy surrounding health taxes. He called for a concerted study aimed at enriching the design, adoption, and implementation of such taxes by delving into their political dynamics. 

Meanwhile, Dr. Bolanle Olusola-Faleye, Chief of Party at the USAID-funded Local Health System Sustainability Project (LHSS), highlighted the potential of health taxes to significantly bolster health insurance coverage for vulnerable demographics.  

Emphasizing the allocation of health tax revenues for the health sector, she emphasized the need for transparency, efficiency, and accountability in implementation. 

What you should know 

Health tax policy refers to the implementation of taxes specifically targeted at funding healthcare services and initiatives. 

The purpose behind health tax policies is to generate revenue that can be allocated towards improving healthcare infrastructure, providing essential medical services, supporting public health programs, and addressing healthcare disparities within a population. 

• The concept of health tax policy emerged as governments sought sustainable funding mechanisms to meet the increasing demands and costs associated with healthcare delivery.  
• Traditional sources of healthcare funding, such as general taxation or out-of-pocket payments, often prove insufficient or inequitable, particularly in countries with limited resources or where healthcare costs are rising rapidly. 
• Health tax policies can take various forms, including taxes on specific goods or services deemed detrimental to health (e.g., tobacco, alcohol, sugary beverages), payroll taxes earmarked for healthcare, or dedicated taxes on income or wealth.  
• These taxes are designed not only to raise revenue but also to influence behaviour by discouraging unhealthy habits or consumption patterns. 
• The implementation of health tax policies is often accompanied by debates and discussions surrounding their equity, effectiveness, and potential unintended consequences.  
• Advocates argue that such policies can contribute to improved population health outcomes, reduce healthcare costs associated with preventable diseases, and promote social justice by ensuring that the burden of healthcare financing is distributed fairly across society. 
• However, critics may raise concerns about the regressive nature of certain health taxes, which disproportionately impact low-income individuals, or question the efficacy of taxation as a means of behaviour change.  
• Additionally, there may be challenges related to tax enforcement, evasion, or the potential for unintended economic consequences.