Tracking the Innovative Use of Alcohol Taxes to Support Family Planning: Guatemala

Publication date: 2013

TRACKING THE INNOVATIVE USE OF ALCOHOL TAXES TO SUPPORT FAMILY PLANNING Guatemala October 2013 This publication was prepared by Herminia Reyes, Marisela de la Cruz, and Marlyn Marin of Futures Group. HEALTH AND EDUCATION INITIATIVE POL ICY PROJECT Suggested citation: Reyes, Herminia, Marisela de la Cruz, and Marlyn Marin. 2013. Tracking the Innovative Use of Alcohol Taxes to Support Family Planning: Guatemala. Washington, DC: Futures Group, Health Policy Project. The Health Policy Project is a five-year cooperative agreement funded by the U.S. Agency for International Development under Agreement No. AID-OAA-A-10-00067, beginning September 30, 2010. It is implemented by Futures Group, in collaboration with the CEDPA (part of Plan International USA), Futures Institute, Partners in Population and Development, Africa Regional Office (PPD ARO), Population Reference Bureau (PRB), RTI International, and the White Ribbon Alliance for Safe Motherhood (WRA). Tracking the Innovative Use of Alcohol Taxes to Support Family Planning: Guatemala OCTOBER 2013 This publication was prepared by Herminia Reyes, Marisela de la Cruz, and Marlyn Marin of Futures Group. The information provided in this document is not official U.S. Government information and does not necessarily represent the views or positions of the U.S. Agency for International Development. CONTENTS Acknowledgments . v Abbreviations . vi Introduction . 1 Background . 1 Methodology . 3 Results . 3 Discussion . 5 Challenges to Policy Implementation . 7 Recommendations . 7 References and Resources . 8 ACKNOWLEDGMENTS This report was prepared by Herminia Reyes, Marisela de la Cruz, and Marlyn Marin of the Health and Education Policy Project (HEPP). The authors thank Mona Mehta Steffen, Nancy McGirr, Nancy Yinger, and Tyler Bradford for their valuable input. Gratitude also goes to Lori Merritt and Aria Gray for their editorial and design support, respectively. ABBREVIATIONS CNAA National Contraceptive Security Commission CPR contraception prevalence rate CSO civil society organization FP family planning ENSMI National Survey of Maternal and Child Health Global Fund Global Fund to Fight AIDS, Malaria and Tuberculosis HEPP Health and Education Policy Project MINFIN Ministry of Public Finance MSPAS Ministry of Public Health and Social Assistance PAHO Pan American Health Organization Q quetzales (Guatemalan currency unit) RH reproductive health SICOIN Integrated Accounting System TFR total fertility rate USAID United States Agency for International Development 1 INTRODUCTION Over the past 10 years, through successive health and education programs in Guatemala—most recently the Health and Education Policy Project (HEPP)—Futures Group has worked closely with the Ministry of Public Health and Social Assistance (MSPAS), National Contraceptive Security Commission (CNAA), civil society organizations (CSOs), and other local stakeholders to support policy changes to redress inequities in access to health services. The activities were also designed to contribute to improved national and local governance by forging links across government and civil society to strengthen transparency and accountability. One clear outcome of these partnerships was the passage of the 2004 Distribution of Distilled Spirits, Beer and Other Fermented Beverages Law, which aims to increase funding for family planning and reproductive health (FP/RH). This brief report summarizes the findings of a budget tracking exercise to assess the law’s implementation. Background In the early 2000s, after a long history of restrictive FP/RH policy, the government began to acknowledge the relationship between health, particularly reproductive health, and development. Figure 1 highlights the evolution of FP/RH-related policy. While these laws create a foundation for subsequent government and CSO activity, implementation may unfold over several years. As a first step, the government recognized the need for a more open public dialogue on development issues. The Social Development Act (2001) and the Decentralization Act (2002) created a legal framework for advocacy and public discourse. In addition, as a response to requests by the MSPAS and advocacy from CSOs, the Guatemalan Congress increased the 2003 public sector budget for health from Q1,726 million to Q1,752 million, an increase of Q26 million (US$4 million). FP/RH programming in Guatemala also benefitted from contributions from bilateral donors, multilateral agencies, and CSOs. For example, the United States Agency for International Development (USAID) worked to build the capacity of government and CSOs to implement policies that address inequities in access to health services and to ensure effective health financing. Canada and the Netherlands, among others, also contributed to strengthening the FP/RH program. In 2004, Congress further formalized its commitment to FP/RH by including an innovative tax initiative in the Distribution of Distilled Spirits, Beer and Other Fermented Beverages Law (hereafter referred to as the Alcohol Tax Law). Article 25 of that law states that a minimum of 15 percent of the funds raised through a tax on alcohol are to be allocated to MSPAS for sexual and reproductive health programs, family planning, and alcoholism prevention and treatment services. Other legislation sought to expand access to FP/RH services, particularly for those groups that traditionally face limited access, such as the poor and indigenous or rural populations. In 2005, Congress passed the Universal and Equitable Access to Family Planning Services Law (Decree 87-2005). The law had three major provisions related to FP/RH. First, it sought to promote equitable, universal, and affordable access to high-quality FP/RH services and information by focusing on unmet need among people with limited access. Second, the law required that MSPAS create a line item in its general budget for the alcohol tax revenue, which facilitated budget monitoring. Lastly, the law mandated the creation of the CNAA, although it was not fully installed until 2009. The commission comprises nine organizations, including the MSPAS, Ministry of Public Finance (MINFIN), Ministry of Education (MINEDUC), the Social Security Institute, the Women’s Secretariat in the Office of the President (SEPREM), the Indigenous Women’s Defense Group (DEMI), and CSOs such as the Guatemalan Medical Women’s Association (AGMM), the Organization for Women’s Health and Development (ISDM), and the Family Welfare Association (APROFAM). 2 The CNAA acts as a watchdog for FP/RH-related issues through three main functions: 1. Ensuring the availability of funds—especially in the public sector—for the purchase of contraceptives through discussion and advocacy with various stakeholders involved in the allocation of financial resources and identification of various sources of financing. 2. Formulating strategies and mechanisms to ensure that FP methods are purchased competitively on the international market. 3. Ensuring that institutions involved in FP/RH purchases identify and share policies and strategies regarding commodity logistics. Most recently, Congress passed the Law for Healthy Motherhood (2010), a broad public health law focused on the provision of high-quality, public sector maternal and neonatal care for all of Guatemala’s people (PAHO, 2011). Furthermore, this law modified the 2004 Alcohol Tax Law, Article 25, to stipulate that 15 percent of the alcohol tax revenues must be allotted to FP/RH programming, and of which, 30 percent must be used for the purchase of contraceptives. This modification established an additional level of accountability, in that the MSPAS can no longer spend the entire alcohol tax allocation on general programming. Although not fully implemented until 2012, this law provides a framework for the procurement of contraceptives in the future. Strong advocacy from multisectoral groups such as the CNAA and CSOs has also been a crucial component of the FP/RH policy process in Guatemala by placing consistent pressure on the government to address FP/RH. Organizations such as the Reproductive Health and Nutrition Watchdog (OSAR), the Network of Women for Peace Building (REMUPAZ), and the Alliance of Indigenous Women’s Organizations for Reproductive Health, Nutrition, and Education (ALIANMISAR) have lobbied the ministries and Congress to enact and enforce legislation that increases women’s access to FP/RH services. Figure 1. Guatemala Legislation Related to Family Planning Since 2001 3 The positive funding trends and policy changes contributed to a marked increase in Guatemala’s overall contraceptive prevalence rate (CPR) and a decrease in the total fertility rate (TFR). Nationwide, the CPR increased from 43 percent in 2002 to 54 percent in 2009, and the TFR decreased from 4.4 children per woman in 2002 to 3.6 in 2008-09 (ENSMI, 2002; ENSMI, 2008–2009). However, there remain great disparities in the use of FP/RH services across Guatemala’s regions and among different ethnic groups. According to the most recent data (2008–2009), urban, married women of reproductive age are much more likely to have ever used at least one method of contraception (87%) than their rural counterparts (66%). Married indigenous women are much less likely to have used a method (40%) than nonindigenous women (62%) (ENSMI, 2008–2009). Women’s unmet need for family planning is substantial at 20.8 percent, and the modern contraceptive prevalence rate of 44 percent is the second lowest in Latin America and the Caribbean. These gaps indicate an ongoing need to ensure that current funding is allocated and used as mandated and to find ways to deepen investment in the country’s FP/RH program. Methodology Government budgets were examined to assess implementation of the 2004 Alcohol Tax Law, article 25, including whether the funds were allocated and used as stipulated. The budget tracking exercise investigated both the amount of funds transferred from MINFIN to the MSPAS and how MSPAS allocated those funds. Although the Guatemalan government has clearly made significant commitments to fund the FP/RH program, to date, implementation of the 2004 Alcohol Tax Law has not been examined systematically. This exercise was designed to address three questions: 1. Was all of the 15 percent alcohol tax revenue transferred to MSPAS? 2. Was all of the 15 percent tax revenue allocated to FP/RH by MSPAS? 3. Did MSPAS use the revenue from the alcohol tax to augment its FP/RH budget? HEPP Guatemala staff used published budget reports from MINFIN to assess the alcohol tax revenue during 2006–2012. In addition, with essential support from staff at MSPAS and MINFIN, legislative procedures and other documents from MINFIN, MSPAS, and CNAA were collected and reviewed. RESULTS The analysis first considered whether the full 15 percent from the alcohol tax revenue was given to the MSPAS. Table 1 shows that due to an increase in overall alcohol tax revenue receipts, revenue transfers to the ministry increased from 2006–2012. The MSPAS allocation increased from about Q32.5 million (US$4.1 million) to Q41.5 million (US$5.2 million), an additional Q9 million (US $1.1 million). 4 Table 1. Alcohol Tax Revenue Received and Estimated by MINFIN (Q millions) Year Amount Actually Received at End of Year from Alcohol Tax (Q millions) 15% of Actual Alcohol Tax Receipts (Q millions) Amount MINFIN Estimated as 15% of Tax (Q Millions) % of Total Taxes Collected, Estimated Each Year in the MSPAS Budget 2006 217.40 32.60 32.57 100 2007 231.40 34.70 32.57 94 2008 240.41 36.06 22.71 63 2009 234.87 35.23 33.72 96 2010 257.65 38.65 33.72 87 2011 279.01 41.85 38.48 92 2012 291.28 43.69 41.45 95 Source: MINFIN’s Integrated Accounting System (SICOIN) as of February 18, 2013, The second step in the analysis was to track the extent to which the alcohol tax funds were applied to FP/RH programming. Table 2 shows almost all of the revenue collected from the alcohol tax was transferred from MINFIN to MSPAS (an average of 97% across all years, discounting 2008 as an outlier). Despite the overall high rate of funds transfer, there are year-to-year fluctuations in the percent transferred of the actual tax receipts, with 2008 being particularly low. The amounts budgeted by MINFIN generally correspond to tax proceeds from the previous year and are thus lower than 15 percent of the actual receipts, and the amounts allocated also depend on a budget ceiling established for MSPAS by Congress. In addition, on average, MSPAS used approximately 90 percent of the MINFIN-supplied alcohol tax funds for FP/RH programs, discounting 2012 as an outlier.1 Financial resources allocated but not programmed by MSPAS are transferred to a governmental common fund, and if the fiscal year has not expired, they can be used to pay government debt or be transferred to another ministry. If the fiscal year has ended, they go into the budget for the following fiscal year. Table 2: Allocation of Funds and Use for FP/RH Year Amount MINFIN Estimated as 15% of Tax (Q Millions) Allocated to MSPAS 15% of Tax (Q Millions) Transferred from MINFIN to MSPAS (%) Amount used from 15% Tax for FP/RH (Q Millions) MSPAS, Funds Used for FP/RH Programs (%) 2006 32.57 32.57 100.0% 27.37 84.0% 2007 32.57 32.42 99.5% 29.46 90.9% 2008 22.71 32.26 142.1% 28.84 89.4% 2009 33.72 29.22 86.7% 27.74 94.9% 2010 33.72 32.76 97.1% 29.15 89.0% 2011 38.48 38.68 100.5% 35.68 92.2% 2012 41.45 41.45 100.0% 16.02 38.7% Source: MINFIN’s Integrated Accounting System (SICOIN) as of February 18, 2013, 1A change in administration at MSPAS as a result of the 2011 elections disrupted funding allocations to the FP/RH program. 5 The final piece of the analysis sought to determine whether the revenue from the alcohol tax has provided additional funding for the FP/RH program, or if MSPAS used the revenue as a substitute for other sources of funding. Table 3 shows the main categories of estimated MSPAS funding for FP/RH programs, including current income, the alcohol tax, external loans, and external grants. Although the alcohol tax revenue has served as an important component of the MSPAS budget for FP/RH, Guatemala continued to obtain other funds for FP/RH services. Current income includes all revenue inflows including taxes and transfers, duties, and proceeds from the sale of goods. External loans include funds received as loans from foreign governments and agencies and regional and international institutions—both short term and long term. External grants include funds that come from monetary or in- kind donations from countries or international organizations, as well as cash balances (MINFIN, Budget Office, 2008). For example, in 2008, MSPAS received funds from the International Finance Corporation and the World Bank to improve healthcare, including FP/RH. The external grants shown in Table 3 were received from the United Nations Development Program and the Republic of Korea (among others) in 2008 and 2012 for FP/RH. Findings show that other sources of revenue for FP/RH continued after the alcohol tax was implemented, with external loans comprising a much larger portion of the FP/RH budget. Legislation made alcohol tax revenue traceable in 2006, but other revenue sources (current income and external grants and loans) only became traceable in 2008. Given the paucity of data, HEPP Guatemala could not determine whether the alcohol tax revenue substituted for other funds or was additive to the budget. Table 3: Estimated Funding for FP/RH within MSPAS Year Current Income (Q millions) 15% of Alcohol Tax (Q millions) External Loans (Q millions) External Grants (Q millions) 2006 N/A 32.57 N/A N/A 2007 N/A 32.57 N/A N/A 2008 0.63 22.71 96.47 9.67 2009 0.64 33.72 115.80 0.00 2010 0.64 33.72 115.80 0.00 2011 3.15 38.50 0.00 0.00 2012 48.90 41.45 54.35 1.62 N/A— Funds were not assigned for FP/RH in these budget line items. Source: MINFIN’s Integrated Accounting System (SICOIN) as of February 18, 2013, DISCUSSION The budget tracking exercise shows that 15 percent of the alcohol tax revenues has been allocated as mandated from MINFIN to MSPAS (on average 97%) and that MSPAS has allocated most of the revenue to FP/RH (90%) as stipulated by the law. Minor revenue leakages at various points in the budget cycle may contribute to results less than 100 percent. In addition, the data show that the alcohol tax remains a viable source for FP/RH funding in Guatemala. MINFIN data show that alcohol tax revenue receipts are up from Q217.4 million in 2006 (2006 US$26,828,600) to Q291.3 million in 2012 (2012 US$36,609,300). Despite this increase in overall alcohol tax revenue, the amount used by MSPAS for FP/RH has averaged about Q27.8 million (2012 US$3,492,300) if the outlier years 2008 and 2012 are included in the analysis. 6 Guatemala has a complex budget schedule that makes tracking and implementation of the 15 percent tax complicated. Budget requests must be made to MINFIN between July 15 and September 2 for the subsequent fiscal year. However, revenue estimates from the alcohol tax are not known until December, and because that is the end of any given fiscal year, MSPAS uses the actual tax revenues from the current year as a proxy for its request for the subsequent year—despite the evidence that revenues are increasing. In addition, budget requests are evaluated by Congress and adjusted based on the assessed need of the individual ministry or project. MINFIN may also cut original budget requests based on projected incoming tax revenues. Other complex budgetary requirements may affect resource allocation and leakage between MINFIN and MSPAS and hence the funds ultimately available for FP/RH programming:2 • MSPAS is required to prepare a broad yearly plan at the beginning of each fiscal year. • MSPAS is then required to prepare a more specific plan every four months in order to receive the allocated funds. • The funds committed for a given four-month period and monthly returns and payments are approved by resolutions issued by a committee at MINFIN, which takes into account National Treasury programming. • Approved funds are incorporated into the Integrated Accounting System (SICOIN) at MINFIN. • MSPAS may not exceed the approved funds for any four-month period. • Any remaining funds from payments and returns not utilized in each month will expire. The tracking data show that other sources of revenue have contributed to the FP/RH program; however, the budget exercise could not determine whether the alcohol tax revenues augment the budget or simply substitute for other sources of funding. It is clear that the government is making efforts to support FP/RH services; contributions from other income have increased from Q0.63 million (2008 US$79,848) to Q49 million (2012 US$6,145,530). Nonetheless, in general, the MSPAS budget—at 1.6 percent of the gross domestic product—remains insufficient to provide universal coverage of high-quality FP/RH services (USAID, 2013). Increased budget transparency is another positive by-product of the FP/RH-friendly legislation. Prior to 2006, there was no budgetary line item for FP/RH in the MSPAS budget. Passage of Article 25 of the 2004 alcohol tax law required that these funds be tracked, and therefore, an FP/RH line item was added. Subsequent FP/RH legislation called for increased budget specificity to trace other revenue sources and expenditures—all actions that enhanced transparency. For example, the Law for Healthy Motherhood added a line item in 2010 to track the provision that 30 percent of the revenues from the 15 percent alcohol tax be spent on FP commodities. Beyond the addition of line items, other efforts have improved transparency. For example, MINFIN hosts a website for budget documents (mostly in Spanish, but a few documents in English were added in January 2012). Public access to information about government operations was initiated in 1998 with the launch of SICOIN and expanded in 2008 with the passage of the Public Access to Information Law. The International Budget Partnership, which tracks budget transparency around the world, notes that Guatemala’s score has increased from 46 in 2006 (on a scale of 1 to 100, with 100 being the most open) to 51 in 2012 ( 2 The following information was provided by the MINFIN, Budget Office. 3 The Open Budget Index assesses the availability of eight key budget documents, as well as the comprehensiveness of the data contained in them. It also examines the extent of effective oversight provided by legislatures and supreme audit institutions, as well as the opportunities available to the public to participate in national budget decision-making processes. 7 CHALLENGES TO POLICY IMPLEMENTATION Despite the clear success of the 15 percent tax initiative, a few implementation challenges remain. The timing gap between the deadline for budgetary requests to MINFIN and the reporting of the current-year alcohol tax revenue by MINFIN has resulted in the MSPAS using estimates based on previous year tax receipts. Personnel issues and government and staff turnover also represent a challenge to ministry operations and finance. Donors working in Guatemala have identified this concern (Global Fund, 2013; USG, 2010). An assessment conducted by the Global Fund to Fight AIDS, Malaria and Tuberculosis (Global Fund) in 2013 stated that during the past three years, the MSPAS has suffered from high staff turnover in key areas as a result of changes of government and health ministers. The Global Fund’s report stated that staff turnover has had a negative impact on grant implementation due to lack of continuity in the procurement process. Indeed, the low expenditure of 38 percent of the alcohol tax revenue for FP/RH in 2012 might be attributed to a turnover in ministers at the ministry.4 CNAA needs to continue its advocacy for budget reform at the MSPAS. RECOMMENDATIONS Study findings highlight the need for ongoing monitoring of the 15 percent mandate. These funds are vitally important for the FP/RH program. CNAA and CSOs should support detailed budget tracking in 2014 and 2015 to investigate uses of the alcohol tax revenue allocated by MINFIN but not received by or used for MSPAS FP/RH programming. This fits well with CNAA’s mandate to track and advocate for FP/RH services and to work closely with CSOs to put a spotlight on challenges to improving FP/RH status in the country. Future budget tracking should also examine whether 30 percent of the alcohol tax revenue is being used to purchase FP/RH commodities (as stipulated by the 2010 Law for Healthy Motherhood). MSPAS and CNAA could also develop a model to project future tax revenue, based on the general growth trend in alcohol taxes, rather than simply relying on the previous year’s receipts. Future analyses can also assess FP/RH data, such as the CPR, at the municipal level to determine whether FP/RH services are reaching marginalized indigenous and rural populations, as mandated. To date, such data have not been disaggregated by municipality, so CNAA may need technical assistance to measure the reach of FP/RH programming across the country and different ethnic groups. The challenge of staff and government turnover is hard to address; however, CNAA and CSOs can work together to assess the impact on the MSPAS FP/RH budget and advocate for systems to support budgetary equilibrium during these times. Another important goal is to ensure passage of legislation that eliminates barriers to the cost-effective purchase of contraceptive commodities from regional and/or international sources. If the ministry can procure contraceptives at the lower prices offered by these sources, the tax revenues it receives from the alcohol tax alone is enough to fully cover costs for family planning supplies. 4 According to HEPP discussions with representatives of civil society and the CNAA. 8 REFERENCES AND RESOURCES Comisión Nacional de Aseguramiento de Anticonceptivos. 2011. “Resultados y Prioridades 2011.” Presentación de Resultados. Guatemala City: Comisión Nacional de Aseguramiento de Anticonceptivos. Congreso de la República, Guatemala. 2001. Decreto 42-2001. Ley de Desarrollo Social. Guatemala City: Congreso de la República. Congreso de la República, Guatemala. 2004. Decreto 21-04. Ley del impuesto sobre la distribución de bebidas alcohólicas, destiladas, cervezas y otras bebidas fermentadas. Guatemala City: Congreso de la República. Congreso de la República, Guatemala. 2006. Decreto 87-2005. Ley de Acceso Universal y Equitativo a la Planificación Familiar. Guatemala City: Congreso de la República. Congreso de la República, Guatemala. 2010. Decreto Número 19-2010. Disposiciones de apoyo financiero, readecuación presupuestaria, transparencia fiscal y reformas al decreto 72.2008 del Congreso de la República de Guatemala y sus reformas. Diario de Centro América. Guatemala City: Congreso de la República. Congreso de la República, Guatemala. 2010. Decreto 32-2010. Ley para la Maternidad Saludable. Guatemala City: Congreso de la República. Congreso de la República, Guatemala. 2010. Decreto número 30-2010. Ampliación del presupuesto general de ingresos y egresos del Estado vigente para el ejercicio Fiscal 2010. Diario de Centro América. Guatemala City: Congreso de la República. Encuesta Nacional de Salud Materno Infantil (ENSMI). 2002. Guatemala Reproductive Health Survey 2002. p. 83. Available at: Encuesta Nacional de Salud Materno Infantil (ENSMI). 2010. Guatemala Reproductive Health Survey 2008–2009. p. 117. Available at: Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). 2013. Diagnostic Review of Global Fund Grants to the Republic of Guatemala GF-OIG-13-008. Geneva: GFATM. Ministerio de Finanzas Públicas de Guatemala (MINFIN). 2006–2012 (all years). “Recaudacion de Ingresos Tributarios del Gobierno Central.” Guatemala City: MINFIN. Ministerio de Finanzas Públicas de Guatemala (MINFIN). 2006–2012 (all years). “Sistema de Contabilidad Integrada Gubernamental Ejecución de Gastos—Información Consolidada Ejecución del Presupuesto (Grupos Dinámicos).” Guatemala City: MINFIN. Ministerio de Finanzas Públicas de Guatemala (MINFIN). 2007. Acuerdo Ministerial Número 66-2007, Manual para la Ejecución de Convenios. Guatemala City: MINFIN. Ministerio de Finanzas Públicas de Guatemala (MINFIN). 2008. Budgetary Classifications Manual for the Public Sector of Guatemala, Fourth Edition. Guatemala City: MINFIN. 9 Ministerio de Finanzas Públicas de Guatemala (MINFIN). Sistema Integrado de Administración Financiera (SICOIN). Accessed February 18, 2013, at: Pan American Health Organization (PAHO). 2011. “Guatemala Launches Safe Motherhood Initiative.” Retrieved July 2, 2013, from Secretaría de Planificación y Programación de la Presidencia (SEGEPLAN). 2002. Política de Desarrollo Social y Población. Guatemala City: SEGPLAN. United States Government (USG). 2010. The United States Global Health Initiative: Guatemala Strategy. Washington, DC: U.S. Global Health Initiative and Ministerio de Salud Publica, Guatemala. Available at: World Bank. 2013. “Fertility Rate, Total (Births Per Woman).” Retrieved July 1, 2013, from For more information, contact: Health Policy Project Futures Group One Thomas Circle NW, Suite 200 Washington, DC 20005 Tel: (202) 775-9680 Fax: (202) 775-9694 Email: Acknowledgments Abbreviations Introduction Background Methodology Results Discussion Challenges to Policy Implementation Recommendations References and Resources

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