Sin tax hike sought to bolster revenues, cut tobacco use

Warren de Guzman, ABS-CBN News

Posted at Jan 21 2023 08:59 AM

A man lights a cigarette as beneficiaries of government cash aid line up at a covered court in Baseco Compound, Tondo Manila on April 7, 2021. George Calvelo, ABS-CBN News/File
A man lights a cigarette as beneficiaries of government cash aid line up at a covered court in Baseco Compound, Tondo Manila on April 7, 2021. George Calvelo, ABS-CBN News/File

MANILA — Advocates and some officials said Friday that increasing further sin taxes in the Philippines will boost revenues for the government while slashing tobacco use in the country.

The Sin Tax Coalition, led by Action for Economic Reforms, commemorated during the day the 10th anniversary of the 2012 Sin Tax Law with a gathering of supporters, lawmakers, government officials, doctors, health advocates, and civil society groups.

Filomeno Sta. Ana, executive director of AER, said while much has already been accomplished, the work is far from over. He said they will once again advocate for more tax hikes on tobacco and other sin taxes. 

"Unfortunately, the Marcos administration is reluctant to increasing taxes in general, and tobacco and alcohol taxes in particular. President Marcos has been associated with the tobacco industry," he said.

"In the past, when he was a senator he voted for pro-tobacco bills. He opposed tobacco tax and alcohol tax. But that said we think the administration should still consider increasing the tax rates for sin products."

"There is pressure for government to increase revenues in light of higher spending for health, pandemic response, climate change, et cetera. The question that this government faces is how to raise revenues. Perhaps that is the reason behind the Maharlika Wealth Fund, but it is so controversial," Sta. Ana noted.

"But there are other ways to raise the revenues. What we are saying is increasing the rates on tobacco, alcohol and other harmful products will result in substantial revenues as proven in the past," he said.

Sta. Ana said the same justifications for sin taxes in 2012 still hold true now. 

"Such tax rates will reduce consumption of such harmful products. So that is our constructive recommendation, something that we wish this administration will take," he said.
Senator JV Ejercito said this is a viable option.

"Actually, hindi pa natin napapag-usapan yan. This is just a proposal now, to further increase taxes, sin taxes - tobacco, probably sugary drinks, alcohol - especially now that medyo low fiscal ceiling tayo, the government is looking for other sources of revenues. Siguro, ito yung isa sa mga iko-consider natin," he said.

"But we have to discuss it siguro sa Ways and Means Committee. Pero ako, magiging biased, because of course, a big portion or a big chunk of the budget that is allotted for the Universal Healthcare Act comes from the sin taxes," he added.

"And of course, advocacy ko 'yan, being the principal sponsor and author of the Universal Healthcare Act. Of course, more revenues, more budget, that means better implementation."

Ejercito said it is possible higher sin taxes will help the government implement the Universal Healthcare plan faster. 

"It is a work in progress, it is a 5 to 10-year program. So (with) more budget, that means we will realize the full implementation of the UAC much sooner," he said.

Dr. Antonio Dans of the UP College of Medicine said that the tax collections since the enactment of the 2012 law, alongside the four other sin tax reforms enacted since, have helped boost revenues substantially. 

A study by the Philippine Congressional Policy and Budget Research Department estimates that sin tax revenues amounted to P261 billion in 2021, from an average of just P53 billion from 2010 to 2012.

Dans stressed that is all the proof lawmakers need to show that the law works. 

“You can raise tax, reduce consumption, and still earn. We have proof of that, that elasticity is not a figment of our imagination," he said. 

World Health Organization Director-General Tedros Ghebreyesus gave a message of support, encouraging further action against tobacco. 

"The result of the many measures you have taken is that tobacco use has dropped from 30% in 2009 to 20% in 2021. This is great progress. But I am sure you would agree that 20% is still 20% too much. WHO will continue to support you in your fight against tobacco," he said.

Dans said the law has saved more lives than doctors could have hoped for, by preventing millions of Filipinos from enduring tobacco-related illnesses. 

“We have 6 million less smokers today because of tobacco tax. Six million smokers, that is a lot of lives saved. It is something our legislators did, just by signing a law," he said.

AER did not discuss the specific increase in sin taxes they would lobby for.

Smokers interviewed by the ABS-CBN News Team appear ready to take on higher prices to continue their consumption of tobacco. 

Cocoy, not his real name and a smoker for 20 years, said he could tolerate more price hikes even as he admits he has been reducing his smoking.

"Siguro mga anim, bawas bawas na. Nakakapuyat. Nahihirapan ako sa tulog eh. Kaya naman, kumikita. Siguro 'pag hindi na kaya, titigil. Siguro… P20 pesos isang stick, (pang)-merienda na yon,” he said. 

(I consume six sticks a day, but I’ve really cut down. It's been keeping me up, and I’ve been having trouble sleeping. But I can still handle it. I am earning enough. But if I can’t handle it, I will quit. Maybe, if it reaches P20 per stick because that is already enough for a snack.)

Jerry Valera, a water refilling station employee who has been smoking for seven years, said he is also ready to take on more tax hikes on cigarettes. 

He said if the government really wants everyone to stop smoking, they should just ban it outright. 

“Mura, kaya pa rin. Kung masama, ba't pa nila ginagawa?” 

(It is still cheap. I can afford it. If it is really bad for us, why do they keep making it?)

AER and the WHO note raising prices on sin products is more effective at reducing use.

Sta. Ana noted outright prohibition of alcohol in the United States created more problems than solutions, and even led to more violence and lost tax revenues because of organized crime and smuggling.

The study from the CPBRD pointed out though that even after all of the tax hikes on tobacco, cigarette prices in the Philippines are still among the cheapest in the world. 


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