Does Earmarking Lead to More Per Capita Public Health Spending in the OECD?

The World Health Organization advocates the earmarking of health-related taxes to mobilize revenues to be spent on public health spending. While there are certain advantages and disadvantages in the use of earmarked taxes to fund healthcare, the ability to mobilize the revenues will depend on whether earmarked taxes are acceptable to voters or not. Earmarking might generate more funding for healthcare if voters know their tax payments will be spent on programs that are important to them. However, earmarking might discourage funding if voters are unwilling to pay more taxes for healthcare. Regardless, earmarking will not succeed if governments simply replace earmarked taxes for general revenues, leaving public health expenditure untouched. We find that earmarked taxes do not lead to more per capita public health spending in the OECD. If a country has earmarked taxes to support public healthcare, per capita public health spending may decline by over $800, compared to a country with no earmarked taxes supporting public healthcare. The case for earmarking should be based on other arguments instead.