The impact of tobacco taxes, VAT, and affordability on the human development index: a global perspective on future economic trends

The objective of this study is to analyse the correlation between different types of taxation, price, usage, Human-Development-Index (HDI), affordability, and Gross-Domestic-Product(GDP) per capita. In particular, this work hypothesizes that there is a positive relationship between tobacco taxes and HDI. Taxation of tobacco products can enhance human development through a general upswing in public revenues, reduction of tobacco consumption, and the resulting enhancement of health. To test these relationships, cross-sectional-data on 163 countries were used, and four proposed models are estimated using Structural-Equation-Modelling (SEM). We examine the impact of four economic indicators on HDI, demonstrating that all indicators positively and significantly affect HDI. Also, we test the impact of affordability and three economic factors, whereby price in US$ has a positive effect on affordability while taxation and sales taxes have a negative but significant effect. From these findings, it is evident that increasing tobacco taxes can improve the HDI because of the ability to generate public-revenue, decrease tobacco consumption, and improve health status. However, the study also points to some complexities, including the inability to establish causality and the possibility of confounding factors. These insights should be leveraged by policymakers and global health organizations sto develop and implement evidence-based-strategies. More researches are required to understand the qualitative aspects and address existing constraints.