DOH, Docs to PTI: Our Flawed Sin Tax System Breeds a Smoking Epidemic

Press Release— Action for Economic Reforms— 18 May 2012

Those masking the urgency of extensive sin tax reforms do so at the peril of millions of Filipino smokers and their families, representatives from the DOH and the health sector stressed today. Against assertions of the Philippine Tobacco Institute (PTI), data on smoking in the Philippines shows that our excise levies on tobacco are deeply defective, requiring widespread restructuring.

“A statement by PTI last week argued that the current tax system is already fulfilling its objectives of raising revenues and curbing tobacco consumption,” said Dr. Anthony Leachon, a DOH consultant on non-communicable diseases (NCD’s). “They say, for instance, that sin tax returns plummeted by 20% in 2011 only because there were tiny increases in taxes that year.”

“But the facts on tobacco use in the Philippines warn us that they have leaped to conclusions too quickly,” Leachon insisted. “The truth is that a smoking epidemic has slowly been welling up in our midst. And our current sin tax scheme has failed to prevent this.”

Despite the passage of the country’s last sin tax law in 2004, smoking prevalence among adult Filipinos has gradually intensified. From 23.6% in 2003 according to the World Health Survey, it progressively rose to 27.0% by 2007 in Social Weather Station polls. Come 2009, the Global Adult Tobacco Survey would find that the cigarette use had spread to 28.3% of the population.

Yet among teenage Filipinos, the surge upwards has been even more distressing. Between 2003 and 2007, smoking rates swelled by 40% from 19.6% to 27.3%. Based on recent estimates of the National Youth Commission, this may have soared to as high as 38.2% in 2011.

“The evidence that our excise tax system has been inept, health-wise, is simply undeniable,” maintained Dr. Antonio Dans of the UP College of Medicine. “It’s clear that our sin taxes haven’t tamed the Philippines’ grave tobacco epidemic. Neither have they lessened our country’s staggering healthcare expenses and economic losses from smoking-related diseases.”

“If PTI is insistent that the Philippine system has no structural flaws, then they should only compare its performance with that of countries like Thailand. This should dispel any misconceptions of what a ‘working’ sin tax scheme should look like,” Dans stated.

According to the Southeast Asia Tobacco Control Alliance (SEATCA), Thailand has elevated the price of popular cigarette brands to an equivalent of P103.84 per pack by 2009. In so doing, it has successfully shaved its national smoking rates by about 35% from their 1991 levels.

Yet contrary to repeated claims by anti-sin tax reform groups like PTI, the Thai case has also spelled great bonuses for its government’s revenues. In the same time period of 1991-2009, collections for tobacco excise levies scaled up by 185%, instead of plunging downwards.

“Our legislators have nothing to fear from passing sin tax reform measures like HB 5727,” pressed Leachon. “In fact, what they should fear is what will happen to tens of millions of Filipinos if these reforms aren’t signed into law. 300,000 Filipinos already are dying yearly from NCD’s, many of them because of smoking-related causes. A failure of Congress to pass the bill best suited to reverse this trend would be a true health catastrophe for the Filipino people.”

For some tables related to Philippine smoking prevalence, and a comparison of the Philippines’ and Thailand’s sin tax performance, please click here

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