The Effectiveness of Sin Taxes on Public Health and Revenue Generation in Tuvalu: Insights from New Zealand

Abstract

Tuvalu faces a dual challenge of high non-communicable disease (NCD) burdens and constrained fiscal capacity. This thesis investigates whether excise taxes on sugar-sweetened beverages (SSBs), alcohol, and tobacco can improve health outcomes and provide a stable revenue base. Using New Zealand’s Pacifica population as a proxy, Household Economic Survey (2006–2019) records were linked to pharmaceutical dispensing, hospitalisation, and mortality data within the Integrated Data Infrastructure. Logistic regression models were estimated to examine whether household expenditure shares on sin goods predict chronic disease medication uptake and mortality. Households in the highest SSB expenditure tier had 36 % higher odds of diabetes-management prescription uptake (OR = 1.36, p < 0.01). Cardiovascular medication outcomes showed modest but statistically significant increases in odds, including diuretics (OR ≈ 1.16, p < 0.05) and beta-blockers (OR ≈ 1.22, p < 0.01). Mortality associations were mixed: SSB-only expenditure was associated with lower odds of mortality among those aged 60+ (OR ≈ 0.75, p < 0.01), whereas broader sin-goods measures, particularly those including tobacco, were linked to higher mortality odds (OR ≈ 1.56, p < 0.01). Within the Pacifica subsample, effect directions were similar but rarely statistically significant, reflecting smaller sample sizes and contextual constraints. These findings suggest that excise taxes can influence health outcomes, particularly for diabetes management, while mortality effects vary by product scope and population group. Expenditure shares were relatively consistent across income groups, implying a stable fiscal base. However, this study does not estimate price elasticities and therefore does not quantify revenue effects. Because excises are financially regressive, earmarking revenues for health promotion and supporting affordable substitutes are recommended to mitigate distributional concerns. Overall, well-designed excise taxes show conditional promise for improving health outcomes in Tuvalu when paired with broad coverage, adequate rates, and ongoing evaluation.