A recent Health Foundation report argued that planned NHS funding increases will be insufficient to keep up with demand pressures and rising costs. So what are the options for addressing this gap? Across the four health administrations of the UK, the long-term sustainability of the NHS depends on the willingness of policymakers to allocate sufficient resources to health. Yet, in a context in which ‘non-protected’ sectors are facing real-terms cuts of up to 40%, it is doubtful that health care can receive an ever greater share of general government revenues. This means alternative forms of taxation may be required to meet future health care spending needs.

With this in mind, we wanted to identify international examples of innovative health taxes that could be used to supplement health care spending.

Most of the examples we found concerned taxes on unhealthy products. This type of tax offers other benefits, including addressing health-damaging behaviours (usually of consumers but, in some cases, of manufacturers and retailers). For this reason, such taxes are sometimes framed as ‘win-win’ policies, helping to constrain the demand for health care by improving health while at the same time, raising revenue for health care. There are numerous examples of such taxes, from Denmark’s short-lived ‘fat tax’ to various types of sugary drinks taxes in France, Mexico and (most recently) the UK. A wealth of knowledge exists about how these taxes affect behaviour – and the evidence is very encouraging.

So what is holding us back? There are three key constraints: public opinion, industry opposition, and concerns that much of the tax burden ends up being shouldered by people with lower incomes. It is difficult to address all three of these concerns but some commentators have argued that hypothecation – the process of assigning tax revenues to specific purposes – may help increase public acceptability.

Hypothecation allows voters to make a stronger connection between the taxes they pay and the things they pay for. It seems reasonable to expect that a proposal for a new tax, or an increase in an existing one, would be better supported by the public if they knew it was going to the NHS, a service that commands broad support.

Yet the evidence we have reviewed shows hypothecation is not a panacea. Opponents of such taxes, including commercial companies, have frequently tried to point out – often on quite strong grounds, unfortunately – that funds end up being redirected to objectives that have public support. Indeed, without detailed plans for spending, it is hard to establish that tax receipts have been spent on the things described in the original proposals.

Take a recent example: the Public Health Supplement, implemented in Scotland in 2012, which levied a charge on all large retailers selling tobacco and alcohol. This was presented by the Scottish Government as a means of addressing the health and social problems associated with alcohol and tobacco use while raising funds for ‘preventative spending’. The tax operated via business rates and was hard for retailers to avoid. This dented its ability to change retailer behaviour (the supermarkets did the maths and established that they were better off selling tobacco and alcohol and paying the tax), but it did mean that revenues could be predicted accurately. It was also a difficult tax for supermarkets to pass on to specific customers, so it was not regressive. It was an effective way of raising money.

However, it faced determined opposition from affected retailers. One of their most compelling arguments was that the revenue raised by the tax was not being spent on health, and the public health labelling was misleading. The levy was discontinued after just three years, in 2015 – and it is notable that this decision was unopposed in the public health community.

Another example, at an earlier stage of implementation, is the new soft drinks industry levy, announced in the Budget this year. This is intended to ‘tackle childhood obesity, by incentivising companies to reduce the sugar in the drinks they sell’, with the resulting revenues earmarked for funding sports in primary school (at least in England – the pro rata increases in the budgets of the devolved administrations are currently unassigned).

But in fact, closer inspection of the budget documents shows that just £160m of the predicted first-year revenue of £520m will go to sport, with the rest of the money used to finance the costs of extending the school day. Moreover, Public Health England’s review of the evidence on the impact of sugar taxes concluded that a new tax would need to increase product prices by 10-20% ‘to have a significant impact on purchases, consumption and ultimately population health’; advice which the government has not followed. The resulting ambiguity – about the impacts of the tax and where the money is going – may reduce the public’s willingness to be taxed in this way.

These experiences underline the importance of good policy design. In such taxing times, governments have to think more smartly about how to raise more money. How can new taxes be designed which obtain the behavioural changes desired without compromising much-needed revenues? How can the public be persuaded that an addition to their tax bills might be worth paying, in terms of better population health and a more sustainable NHS? How can the political sustainability of new revenue streams be achieved when new taxes threaten the interests of powerful lobbies? In the context of the scale of the challenges facing the NHS (and other public services impacting on public health) developing persuasive answers to these questions is crucial.

Dr Mark Hellowell is a senior lecturer in health policy and Dr Katherine Smith is a reader in global public health at the University of Edinburgh.