Higher tobacco taxes to benefit gov't, public health - ADB

by Kathleen A. Martin, ABS-CBNnews.com

Posted at Nov 13 2012 04:21 PM | Updated as of Nov 14 2012 12:21 AM

MANILA, Philippines - Higher taxes on cigarettes will not only reduce the number of smokers and tobacco-related deaths, but also allow the government to rake in more revenues, the Asian Development Bank reported Tuesday.

"We find that for the five countries in Asia, increases in cigarette prices (in the range of 25%–100%) effectively reduce the number of smokers and the number of smoking-related deaths, and generate substantial revenues," the "Tobacco Taxes: A win-win measure for fiscal space and health" report said

The report covered Philippines, China, India, Thailand and Vietnam and estimated the health and fiscal impacts of higher taxes levied on cigarettes.

ADB found more than 400 million current cigarette smokers in the five countries, with an estimate of more than 130 million future smokers.

Smoking-related deaths were pegged at 201 million from the current smokers, and 65 million from the future smokers.

According to the report, a 50% price hike for cigarettes would reduce the number of current and future smokers by nearly 67 million and cut the incidence of tobacco-related deaths by over 27 million.

Moreover, such will also generate over an annual $24 billion in additional revenues for each government, ADB said.

"The countries in this study have lower per capita cigarette consumption than high-income countries," the report read.

"However, all the countries are populous, growing economies, where cigarette smoking is on the rise. A failure to stem the tobacco epidemic will have major public health implications for both current and future
generations."

For the Philippines alone, ADB estimates the number of smokers at almost 22 million, with tobacco-related deaths seen at almost 11 million.

The number of future smokers are estimated at almost 10 million, while future deaths attributed to smoking are pegged at almost 5 million.

The sin tax bill in the Philippines remain pending in the Senate.

Senator Franklin Drilon's version of the bill projects a P40-P45 billion in revenues from additional taxes on tobacco and alcohol.

Despite being lower than the Finance department's target of P60 billion in revenues, President Benigno Aquino III last week already said he is amenable to accepting a lower revenue haul from the sin tax reforms.

Revenues raised from the hike in taxes on alcohol and tobacco will be used by the government for its universal health care program.