Cigarette, alcohol prices up to welcome the New Year

By RG Cruz, ABS-CBN News

Posted at Dec 31 2013 03:43 PM | Updated as of Jan 02 2014 12:15 AM

MANILA, Philippines – It's been a year since the government increased the so-called “sin” taxes for tobacco and alcohol, but long-time smokers and consumers of alcohol don't seem to have been deterred by the extra buck they have to spend for their vices.

A 28-year-old smoker, Joel, told ABS-CBN News that he has different coping mechanisms for the higher cigarette taxes, such as decreasing the volume of cigarettes he consumes or asking his friends for a stick.

He also switched to a cheaper brand of cigarettes.

Joel is a tricycle driver who makes around P200 a day in the streets of Manila.

He used to spend as much as a P1 per stick or P20 a day for 20 sticks, which he has since decreased to just 12 to 15 sticks a day.

"Bumibili ako ng mura lang, nagpalit ako ng brand. Humihingi minsan. Pagkamaganda ‘yung brand, bawas-bawas sa paninigarilyo. Walang magagawa eh, bisyo lang po," he said.

A taxi driver Joseph, on the other hand, said he's been consuming beer all his life.

Similarly, what used to be daily drinks after work have become fewer and far between.

Joseph said he really allocates money from his meager earnings for his vice.

“Malaki ang binawas sa pag-inom. ‘Di gaya dati, sa isang linggo gabi-gabi, ngayon bihira na lang, mga 3 beses nalang,” he said.

Cigarette vendor Jojo said his sales have dropped since the higher taxes were imposed, from a daily take of P700 to P500.

He has fewer buyers for his current brands of cigarettes, so he is now considering switching to cheaper brands, if not switch to selling candies altogether.

Sin tax law

When Congress enacted Republic Act 10351 increasing the excise taxes on sin products like alcohol and tobacco in 2012, one of its promises was to make consumers kick the habits of smoking and drinking by making the prices prohibitive.

The law provides for a staggered excise tax increase spread out over 5 years from 2013 to 2017. For a pack of tobacco, that meant a P12 increase in tax for low-end brands and P25 increase for high-end brands back in January 1, 2013.

By January 1, 2014, this will go up further by P5 to 17 pesos in tax for low-end cigarettes, and P2 to P27 in tax for high-end cigarettes.

Fermented liquor worth less than P50.60 per liter were imposed a P15 tax in 2013, only to go up to P17 by January 1. Fermented liquor worth more than P50.60 per liter was taxed an additional P20 in January 1, 2013--a tax that will go up to P21 on January 1.

At the time of passage, the bill projected additional sin tax revenues of P33.96 billion for 2013, an amount projected going up to P42.86 billion in 2014; P60.63 billion in 2015; P56.86 billion in 2016; and P64.18 billion in 2017.

By the box

Bureau of Internal Revenue Commissioner Kim Henares, in a phone interview, observed that there are now fewer cigarettes being sold by the stick.

However, there are more cigarettes being sold by the box, which means, more people are stretching the contents of one box.

She also concedes the projected decrease in cigarette sales is nowhere near the vision of the government.

Henares said not all the taxes have been passed on to consumers, as some tobacco companies have decided to bear some of the taxes.

Nevertheless, government seems happy, reporting that as of November 2013, government already exceeded its sin tax collection target for 2013.

"We won't know ‘til the end of the year, but as of November we collected P91 billion already. We exceeded our total goal of P85.8 billion," said Henares.

Government plans to use the taxes collected on health and health-related projects by next year.