CASE STUDY 1 - Using a tobacco tax to finance health promotion

In the Australian State of Victoria, a portion of the tax imposed on tobacco products is used to promote good health.

The Victorian Health Promotion Foundation (VicHealth) is funded by a dedicated levy of 5% on sales of tobacco products, which now brings in Aus$22million per year. Of these funds, 20% go to research, 20%-30% to sports and arts, 40% to community, health and schools activities, and 10% to administration. Surplus funds are used for consulting, development and evaluation.

The new tax raises the price of cigarettes and thus provides a disincentive for smokers. A percentage of the tobacco tax is then used to fund health promotion throughout Australia in areas much wider than tobacco control - non-communicable disease prevention, mental illness prevention and environmental health promotion.

VicHealth, through its work with government, health agencies and community groups, has been able to lower smoking, drinking and injury rates in the state.

VicHealth has found that using a dedicated levy for health promotion includes the following advantages:

* Funding for the Health Promotion Foundation does not come from the general health budget, and thus does not have to compete with other claims from health services;

* Longer-term investment in health promotion initiatives is possible because there is security of funding;

* All sectoral interests (including the economic and education sectors, housing, transport, sports and arts, local governments and community organizations) are catered for through their representation on Foundation boards and committees;

* Community interest becomes part of the decision-making process.

VicHealth has sponsored sports and cultural events, which the tobacco industry has traditionally found attractive, to promote the benefits of not smoking and of adopting a healthy lifestyle, including healthy food and exercise, safe drinking, avoiding sunburn, cervical smear tests, mental health, safety promotion and safe sex.