Philippine sin tax experience offers lessons for East Asia region — Int’l panel

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MANILA, March 8, 2013 – The “seven wins” of the Philippines’ sin tax law for the youth, the poor, health, economy, farmers, governance, and future are now raising the  interest of international organizations and other governments in the Asia-Pacific Region.

This was a central theme that emerged in a recently-concluded East Asia and Pacific Regional workshop on Tobacco and Alcohol Tax Reform held last week at the Sofitel Hotel, Manila.

“Tobacco (and alcohol) taxation is truly a win-win policy. A win for revenues, and a win for public health. Tobacco kills 5.4 million persons worldwide every year. Unless urgent action is taken, the annual death toll can rise to more than 8 million by 2030. The reason why so many of us attended the workshop reflects the importance and urgency of the issue – as well as the effectiveness of taxation as an instrument in reducing it,” said Mr. Jim Brumby, World Bank Sector Manager for Poverty Reduction and Economic Management.

“I would like to acknowledge the monumental success of the Philippine government in pushing through with the sin tax reform. The workshop was held here in the Philippines in large part because of the interest that countries in the region— and beyond— have shown in these reforms,” Mr. Brumby said.

The regional workshop was organized by the World Bank— with the support of international organizations such as the World Health Organization, the Asian Development Bank, the Campaign for Tobacco Free Kids, the Southeast Asia Tobacco Control Alliance, and the International Union against Tuberculosis and Lung Disease—and was attended by government officials and civil society representatives from ten Asia-Pacific countries.

In the workshop, Department of Health (DOH) Secretary Enrique Ona lauded the first year of implementation of R.A. 10351 for bringing about the “largest financing growth in the history of the Department”— a 57.9 percent expansion in the DOH’s 2014 budget over that in 2013.

“It is still too early to determine the public health impact of RA 10351, but this has greatly increased excise tax collections translating into a significant increase in funding for our health programs,” Secretary Ona said. “The future looks bright for our program of Kalusugang Pangkalahatan or universal health care. The expanded fiscal space for health has already allowed us to enrol an additional 9.5 million families for 2014 to the National Health Insurance Program.”

Said Department of Finance Undersecretary Jeremias Paul: “Even while the Philippines’ sin tax law was passed in a specific context, common lessons can be drawn by other governments in the region hoping to adopt this kind of policy. One of the first lessons is that it is crucial to aim high, in order to reap the maximum possible gains for health and fiscal space.”

“After the first year of implementation, the gains of our sin tax reforms have also been quite encouraging on the financial side: revenue collections have far exceeded government expectations, and good governance has been promoted in a tax scheme once notable for its loopholes and leakages,” Usec. Paul added.

Secretary Ona and Undersecretary Paul’s statements on the lessons and gains of the sin tax law were also affirmed by Action for Economic Reforms (AER), the government’s main civil society partner in the passage of the measure.

“The Philippines’ sin tax law is, to a great degree, the result of constructive collaboration between government reformers and civil society advocates for the public interest— a story which other countries can learn much from,” asserted Mr. Filomeno Sta. Ana, AER Coordinator. “We can confidently say that sin tax reformers in the Asia-Pacific have much to gain by framing tobacco taxation primarily as a health issue, by obtaining the active political support of top public officials, and by intensively collaborating with civil society organizations.”

 

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