Podcast Summary: The Tobacco Epidemic – Bill Savedoff

Podcast: The CGD Podcast
Host: Center for Global Development | Interviewer: Rajesh Merchandani
Guest: Bill Savedoff, Senior Fellow, Center for Global Development
Date: May 27, 2015

Episode Overview

This episode focuses on the global tobacco epidemic, especially in low and middle-income countries, and explores the potential of tobacco taxation as a powerful policy tool. Host Rajesh Merchandani speaks with health policy expert Bill Savedoff about the health, economic, and social impacts of tobacco and addresses common arguments against tobacco tax hikes. The discussion emphasizes tobacco taxes’ unique power to save lives, increase government revenue, and reduce health costs—framing it as a clear "triple win" for development policy.

Key Discussion Points & Insights

1. The Scale of the Global Tobacco Problem

• Smoking Prevalence:
  • Despite declining smoking rates in wealthier countries, tobacco use is climbing rapidly in the developing world.
  • "80% of the world's smokers now live in low and middle income countries. In countries like China, the prevalence rates are well over 28%, 30%, and they're growing. So that means about 1.2 billion smokers."
    — Bill Savedoff [01:03]
• Projected Deaths:
  • The health consequences are staggering:
    • 20th century: 100 million died prematurely from tobacco use.
    • 21st century projection: A billion premature deaths is expected if current trends persist.
    • "Tobacco is one of these dramatic risk factors that has huge impact on health... Currently figures are about 2/3 of the people who smoke regularly are going to die prematurely from diseases associated with tobacco."
      — Bill Savedoff [01:46]

2. The Economic Burden

• Direct and Indirect Costs:
  • Health systems face massive costs treating tobacco-related diseases.
  • Example: In India, about a quarter of public health spending is on treating illnesses caused by smoking.
  • Indirect costs include lost productivity and early deaths among working-age populations, threatening economic growth.
• Comparative Impact:
  • Tobacco dwarfs other public health issues in its potential for life-saving interventions.
    • "It dwarfed anything that I had looked at in other health policies, both in terms of the burden of disease, how many people were affected, and in terms of the effectiveness of the tools we have."
      — Bill Savedoff [04:20]

3. How Tobacco Taxes Work

• Effect on Consumption:
  • A 10% increase in tobacco price lowers smoking by ~4% in developed countries and up to 8% in developing countries.
  • "A tax increase does two things for you. It reduces the number of people who are smoking... and improves health outcomes. At the same time, it actually does generate revenues."
    — Bill Savedoff [05:11]
• Revenue Generation:
  • Despite decreasing smoking rates, revenues rise because consumption doesn’t fall fast enough to offset the higher tax.

4. Common Arguments Against Tobacco Taxes—and Counterarguments

a. Impact on Jobs & Exports

• Tobacco industry argument: Tax hikes will cost jobs.
• Rebuttal:
  • Money not spent on tobacco is reallocated to other sectors, often more labor-intensive, resulting in a net employment gain.
    • "Shifting demand away from tobacco into other products is actually going to improve employment rather than reduce it."
      — Bill Savedoff [07:13]

b. Effect on Government Revenues

• Industry claim: Revenues won’t really rise or are not reliable.
• Rebuttal:
  • The responsiveness (elasticity) of smoking is such that revenues do increase.
  • The primary purpose should remain health, not fiscal dependence.
  • "If we raised tobacco taxes 10% and everybody quit smoking, it would be a huge public health success."
    — Bill Savedoff [08:10]

c. Regressivity & Impact on the Poor

• Industry claim: The poor are hurt the most by tobacco taxes.
• Rebuttal:
  • Poor people are more price responsive; they quit or reduce consumption more than the rich, gaining disproportionate health benefits, and ultimately paying less tax as a group.
    • "The poor benefit more than the rich because more of them reduce smoking, and therefore they live longer and they live healthier lives."
      — Bill Savedoff [11:43]

d. Smuggling

• Industry claim: Higher taxes will drive up smuggling.
• Rebuttal:
  • Global evidence shows smuggling rates have stayed stable (9–11%) even with rising taxes.
  • Smuggling is more related to tax administration and border control than price, and major tobacco companies themselves have a history of facilitating smuggling.
    • "To get the magnitude of smuggling that you would need... you have to have the complicity, if not the actual responsibility of the tobacco companies themselves."
      — Bill Savedoff [13:14]

5. Barriers to Implementation

• Tobacco Lobby Influence:
  • Strong opposition from the tobacco industry, including efforts to weaken or complicate taxes or lobby ministries of finance.
  • Civil society must mobilize to counteract industry pressure.
• Fragmented Responsibility:
  • Tobacco tax falls between ministries responsible for health and those for finance; neither sees it as a priority.
  • "It takes a lot of effort to convince a fiscal policy person that this is a tax worth raising... Ditto on the other side, the health people... tobacco, again, it sort of falls to the wayside. It's the lowest priority."
    — Bill Savedoff [16:35]

6. Opportunities for Action

• Policy Windows:
  • Integration into broader development agendas, e.g., the Sustainable Development Goals (SDGs) and financing for development meetings (such as Addis Ababa).
  • International organizations (World Bank, IMF) have begun to support countries technically, but often overlook tobacco tax in fiscal policy discussions.
• Role of International Support:
  • External actors can raise the profile of tobacco taxes and provide expertise, political support, and legal protection against tobacco industry litigation.
    • "This is one place where external actors can actually help out by bringing attention to an issue that is very cost effective. It saves lives, it raises money, and it really should be one of the highest priorities."
      — Bill Savedoff [18:42]

Notable Quotes & Memorable Moments

• On the scale of loss:

  • "We're talking about a billion premature deaths in this century."
    — Bill Savedoff [02:37]

• On policy effectiveness:

  • "If you can do one thing, the tobacco taxes are the big, big item."
    — Bill Savedoff [11:10]

• On fiscal and health priorities:

  • "The primary purpose of the tax on tobacco is to get people to stop smoking and to prolong their healthy lives."
    — Bill Savedoff [08:10]

• On industry tactics:

  • "It's a constant struggle against the tobacco lobby to come up with taxes which are actually very straightforward and simple to administer and very large so that they have the right impacts."
    — Bill Savedoff [15:05]

Timestamps for Key Segments

• Intro & Framing the Issue: [00:05–01:39]
• The Global Tobacco Crisis: Numbers & Trends: [01:39–02:53]
• Economic Consequences in Developing Countries: [02:53–03:57]
• Comparative Effectiveness of Tobacco Policy: [03:57–05:01]
• Mechanics of Tobacco Taxes: [05:01–06:15]
• Rebutting Industry Arguments (Jobs, Revenue, Poor, Smuggling): [06:15–14:53]
• Barriers to Policy Adoption: [14:53–18:03]
• Role of International Institutions & SDG Opportunities: [18:03–20:40]

Conclusion

Bill Savedoff convincingly argues that tobacco taxation is a powerful, underutilized tool for saving lives and advancing development goals. He debunks common arguments against higher tobacco taxes and urges both domestic policymakers and global institutions to prioritize this straightforward measure. The episode finishes with a call to leverage current global development frameworks, like the SDGs, as an opportunity to put tobacco taxes on every policymaker’s agenda.

For more, visit www.cgdev.org.