Cigarette Affordability and the Impact of Tobacco Taxation on Health and Revenue

The heavy burden of tobacco consumption and the high smoking prevalence in the Philippines should compel policy makers to put in place appropriate regulations, including legislation that will effectively curb the growth of tobacco use. Price and tax measures are undeniably effective in reducing tobacco consumption.

Increasing the tobacco price through taxation has become even more critical and urgent in light of the declining real prices of cigarettes, arising mainly from a problematic and infirm Philippine excise tax system. Said differently, reforming the excise tax policy, which includes a tax increase, is key to meeting the government’s health objectives such as reducing smoking prevalence—the Philippines having one of the highest in the world—and saving lives and resources.

An appeal to Rep. Mandanas

As the 15th Philippine Congress resumes its regular session on Nov. 14, 2011, we look forward to seeing the Lower House immediately tackle the passage of a bill that will reform tobacco and alcohol taxes.

After all, no less than the President, with the concurrence of the House Speaker, has pronounced the bill on sin taxes — we prefer to call them health-oriented taxes — as a priority legislative measure.

In fact, the Legislative Executive Development Advisory Council (LEDAC) has endorsed a bill that contains the best features found in the bills filed by several House representatives, namely, Henedina Abad, George Arnaiz, Jocelyn Limkaichong, Pryde Henry Teves, and Niel Tupas, Jr.

Higher Sin Tax: Bigger Revenues, Less Consumption

All told, the total cumulative revenues to be generated from the sin tax reform will amount to more than PHP530 billion pesos in six years (2012-16). For the first year alone, the revenues to be collected will reach PHP 60.63 billion pesos, half of the amount to be contributed by the tobacco taxes.

Furthermore, health objectives will be satisfied. We can expect a reduction of approximately two percentage points in smoking prevalence, and we can generate substantial funds to finance the government’s program for universal health coverage.

Developed with Wordpress.