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WHO is calling for countries to increase prices of “sin” goods tobacco, alcohol, and sugary drinks by at least 50%.
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Dr. Derek Yach, former tobacco control advocate and now a harm-reduction proponent.
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Smoking and drinking may soon be too expensive for most consumers.
But can WHO’s “3 by 35” initiative finally make the world a healthier place?
Life can be so simple, or so it seems. In times of tight public finances, why not revive the old idea of the sin tax? This July brought not one, but two such proposals.
On July 2, the World Health Organization (WHO) released its most recent magic formula to reduce preventable deaths from unhealthy products and at the same time generate enormous amounts of money for state coffers. In its “3 by 35” initiative, a global health strategy, WHO is calling for countries to increase real prices of tobacco, alcohol and sugary drinks by at least 50% through health taxes by 2035. By reducing the affordability of these products and thus curbing harmful consumption that fuels global epidemics of heart disease, diabetes, and cancers, the initiative seeks to address noncommunicable diseases (NCD). The measure is estimated to generate up to US$1 trillion globally by 2035, WHO claims.
Two weeks later, the European Commission proposed a new measure called the Tobacco Excise Duty Own Resource (TEDOR), which foresees the application of a uniform 15 percent levy on tobacco products released for consumption—on top of existing national taxes. The measure is expected to generate €11.2 billion (US$13.03 billion) annually, money urgently needed to fund repayment of the bloc’s €650 billion Covid loans from 2028 as well as the Commission’s ambitious €1.816 trillion budget for the 2028–2034 period, which is meant to boost competitiveness, climate action, and defense. The proposal has already stirred debate among member states. Tax matters require unanimous approval in the European Council.
In recent years, WHO has faced financial pressures, too: over 80% of WHO’s funding comes from earmarked voluntary contributions, meaning that WHO can’t freely allocate funds where they are most needed. While the Covid-19 pandemic led to a surge in emergency funding, many of these contributions were short-term and project-specific, leaving gaps in core funding. In addition, inflation and rising costs, geopolitical instability, and competing global priorities have made it harder for member states to commit sustained funding.
In January, the United States announced that it would withdraw from WHO, citing financial mismanagement and inefficiency. The lack of US funding, combined with delayed payments from other members, has contributed to a projected budget shortfall of around US$600 million for 2025.
Apart from advocating for predictable, flexible funding and partnering with development banks and philanthropic organizations, WHO seeks to solve the problem by exploring health taxes to boost domestic health financing in member countries.
Voluntary but tempting
While non-binding, the “3 by 35” initiative might appear as an enticing solution for many member countries, as it could generate critical domestic revenue for many countries as international development funding wanes, and, besides, cut future health costs. According to WHO, NCD account for more than 75% of all deaths worldwide. The initiative, the organization claims, could prevent 50 million premature deaths over the next 50 years.
Its key objectives are mobilizing domestic public resources to support health systems and development programs, supporting country-led policies, and building broad political support across ministries of finance and health, parliamentarians, civil society, academia and international partners to design and implement effective policies.
In the month before WHO’s announcement, the organization’s Noncommunicable Diseases Progress Monitor 2025 and a new WHO/Europe report had found that the world’s NCD targets were off target. In May 2013, WHO had established nine voluntary global NCD targets during the World Health Assembly, among them a 25% reduction in cardiovascular diseases, cancer, diabetes, chronic respiratory diseases, a 10% and a 30% reduction in harmful alcohol use and tobacco use, respectively, and a halt of the rise of diabetes and obesity by 2025.
As of August 2025, most targets are off track globally, especially in low- and middle-income countries. Premature mortality has declined in some regions, but not fast enough to meet the 25% reduction goal. Tobacco, obesity, high blood pressure, and diabetes are rising in many countries, particularly in Eastern Europe and Central Asia. Despite high economic costs, funding for NCD prevention remains critically inadequate, the NCD progress monitor states.
In the WHO European region, 1.8 million avoidable deaths from NCD are reported to occur annually. Ten countries, among them Belgium, Sweden, and Switzerland, have met the 25% mortality reduction target, while 26 more countries could still reach it by 2025, with intensified action. Suicide and alcohol use targets show relative progress, whereas obesity, tobacco use, and hyper-tension are worsening in several subregions.
Fiscal measures as a miracle cure
With global progress being uneven and largely insufficient, the escalation of tax policy advocacy is timed to build momentum before the upcoming Fourth United Nations High-Level Meeting (UNHLM) on NCD on 25 September 2025, which is a once- in-a-decade opportunity for heads of state and government to review global progress on NCD since the last High-Level Meeting, adopt a new Political Declaration that sets the global agenda for 2025–2030, and accelerate action toward achieving Sustainable Development Goals (SDG) Target 3.4: reducing premature mortality from NCD by one-third by 2030.
“The meeting is expected to yield new global political declarations and commitments, with WHO positioning large tax increases as the most effective ‘best buy’ for NCD prevention,” says global health expert Dr. Derek Yach, who as a cabinet director and executive director of WHO was the primary architect of the Framework Convention on Tobacco Control more than two decades ago. “This reflects a deeper institutional view within WHO that fiscal measures—where implemented—achieve significant reductions in mortality, offer high returns on investment, and reinforce health system sustainability.”
The origins of this project lie in WHO’s longstanding advocacy for fiscal measures to address non-communicable diseases (NCD), Yach adds. “But this marks the first time a clear, cross-product tax increase target has been set.”
The “3 by 35” initiative echoes earlier calls by epidemiologists and economists such as Prabhat Jha, and by institutions such as the World Bank, for bold increases in tobacco taxes to reduce smoking rates and narrow health inequities. “These calls argue that poor smokers, being more price-sensitive, see the greatest health and financial benefits from tax hikes.”
He points out that commissions on health economics and policy have repeatedly advocated large tax increases as evidence-based interventions, citing both the direct health benefits and the value of using tax policy for domestic resource mobilization, among them the noted figures Dean Jamison and Lawrence Summers, the authors of the 2024 Global Health 2050 report, which provides a roadmap for achieving dramatic improvements in human welfare in high-, middle-, and low-income countries by mid-century with focused health investments.
The “3 by 35” initiative is also in line with the goals of WHO’s Commercial Determinants of Health Unit, which was launched in 2021 and frames tax policy to counteract the harmful influence of commercial actors and reallocate economic value from profit-making unhealthy consumption to the public good.
Regressive and without real benefit
As would have been expected, the announcement of the initiative was met with harsh criticism from consumer advocacy groups and industry representatives of the three product categories, warning that the plan is regressive and will worsen inequality without delivering real public health benefits. Taxation, they argued, was too blunt an instrument to deliver health benefits and could instead lead to unintended consequences, such as consumers turning to alternative or unregulated products, which may carry greater risk and add to social costs.
Tobacco harm reduction (THR) proponents have long been concerned that WHO treats all tobacco products as equally harmful, ignoring the risk continuum between combustible cigarettes and safer alternatives. THR experts argue that blanket tax increases could make safer nicotine products less accessible, especially to low-income smokers trying to quit.
In a press release, Martin Cullip, international fellow at the Taxpayers Protection Alliance (TPA) Consumer Center in London, said that with “3 by 35”, WHO aimed to draw more money from consumers and taxpayers through extensive ‘sin taxes’ on tobacco and alcohol and potentially other products it deems unhealthy. “Instead of genuinely improving public health, these taxes proposed by unelected WHO officials would unfairly burden low-income individuals, especially in developing countries.” Cullip called the initiative “regressive social engineering” and a “war on the working class.”
Real-world evidence of the success of such ‘health taxes’ remains inconclusive at best, depending also on the product category. According to 2023 World Bank data, more than 130 jurisdictions covering 57% of the world’s population have implemented sugar-sweetened beverage taxes. While these have reduced sales and consumption and led to a reformulation of drinks – albeit often with the help of artificial sweeteners, the health risks of which are not fully clear –, the direct health effects, such as on obesity rates, tend to be weaker and are often based on theoretical models. Current data shows that obesity rates have not decreased in any country.
Regarding deterrent taxation of alcohol, the models of Sweden and Norway are considered best practices, having led to a more than 20% decrease in alcohol-related diseases between 1990 and 2019 in both countries. However, their policies consist of a combination of measures, which apart from high taxes on all alcohol types include the use of retail monopolies to limit availability and strict advertising rules. Getting there has been a long process with unintended consequences – some may remember that in Sweden during the 1980s, particularly after sharp increases in alcohol taxes, there were reports of people turning to alcohol-containing cosmetic products like aftershave, hair tonics, and even rubbing alcohol as cheaper alternatives to taxed beverages. This phenomenon was especially noted among heavy drinkers and marginalized groups, and it became a public health concern.
For tobacco products, the inadvertent outcomes of disproportionate taxation can be observed in many countries, although probably best in Australia, the country with the highest cigarette prices in the world and a high smoking-related death rate, where the illicit market for cigarettes has spiraled out of control and organized crime syndicates now play a dominant role, controlling everything from illegal cultivation and manufacturing to importation, distribution, and sales.
Weak logic, little evidence
“The logic and evidence base for such massive taxation [as stipulated by the WHO’s “3 by 35” initiative] as a deterrent on harmful products is extremely weak, and significant critiques have emerged,” Yach comments, “for instance, illicit trade: Raising taxes, particularly on tobacco, can and has incentivized smuggling, black-market activity and provided finance to terrorist groups. While some studies suggest global illicit trade has not risen in lockstep with higher taxes, it remains a challenge for many regions, potentially undercutting both revenue and health gains.”
He adds that the risk of substitution effects should also be considered. “There are concerns that tax-induced reductions in one harmful product may drive increased consumption of untaxed, potentially more dangerous substitutes. For example, youth who find alcohol expensive may turn to more potent or illicit substances, and highly taxed cigarettes can push consumers toward even riskier tobacco or nicotine products. Increased taxes on sugary beverages could lead consumers to use more obesogenic foods and beverages. Note that the underlying drivers of obesity go well beyond sugary beverages.”
WHO’s one-size-fits-all approach also neglects alternatives, he says: “The ‘tax first’ focus leaves less policy space for tobacco harm reduction strategies, such as promoting lower-risk nicotine alternatives, promotion of the use of GLP-1 agonists [Ed: diabetes and obesity medication] or comprehensive strategies for healthier diets beyond simply taxing sugar, and more nuanced interventions to address youth alcohol use—like restricting marketing, improving education, and reducing binge drinking, rather than relying solely on price.”
Besides, for governments having become dependent on tobacco tax revenue, which WHO estimates to amount to US$1 trillion globally per year, the “3 by 35” initiative’s apparently simple equation may not quite turn out as planned. Examining the recent European Commission’s TEDOR proposal, the Tax Foundation Europe in early August warned that as price increases and quantity demanded falls, price elasticity increases, which means further tax-induced price increases generate less and less revenue. “Even if tobacco tax increases generate more revenue in the short run, the shrinking tax base guarantees long-run revenue declines. The time has come for governments to start weaning themselves off tobacco tax revenue.”