Press Release – Action for Economic Reforms – 17 December 2012

Civil society responded to recent anti-sin tax statements that claimed the measure would kill the industry and posed the question, “Who’s killing who?”

Dr. Antonio Dans of the UP College of Medicine stated that the final version of the bill would decrease smoking prevalence from a stagnant 31% to 27.06% in the first year. “This is bigger than the revenue we will be earning from the tax. This is our biggest win,” said Dans.

This would translate to an estimated 63,000 lives saved and more than 2 million smokers kicking the habit.

He, along with Anton Miguel Ragos, researcher for Action for Economic Reforms, debunked statements found in an ad entitled “Kill Bill” that said the new law is pro-smuggling, anti-tobacco farmers and anti-workers.

In a presentation, Ragos compared cigarette prices in the Philippines to prices in other countries. His data showed that even after a P30 tax increase, the price of the most sold brand will still be one of the lowest in region.

“How can smuggling intensify when our prices are still lower? What’s the incentive for smugglers to buy more expensive cigarettes from other countries and then sell them here when our cigarettes are cheaper?” argued Ragos.

He continued, “Smuggling experiences in other countries were results of industry involvement in illicit trade and not the increase in tax […] And they used this as reasoning to lower the tax rates.”

Ragos cited examples of other countries where this occurred, including Canada, Colombia, and the United Kingdom. He added, “When taxes increase, they will smuggle so they’ll be able to say ‘O ayan, nagkaroon ng smuggling’ para mapilitan ang gobyerno na ibaba [ang rates].”

He pointed out however, that the government “recognizes it [smuggling] as a valid issue” and that the final version of the bill was designed to contain anti-smuggling measures such as export bonds, internal revenue stamps and unique identification markings.

Ragos also addressed the issue of massive layoffs in the tobacco industry, saying, “Employment statistics on tobacco industry show that tax increases and economic shocks in the past did not result to massive lay-offs.”

Data from the Bureau of Labor and Employment Statistics showed that the largest labor displacement (827 displaced workers) in the industry occurred in 2011, a year after the merger of Phillip Morris and Fortune Tobacco

Ang tobacco industry ang nagsasabi na kawawa naman ang mga trabahador namin and yet they could displace as many as 827 workers just like that in one year so they could keep their profits. They’re not really concerned for them,” said Ragos.

He added that the final version of the bill contained transitory provisions that provides for the financing of unemployment alleviation program.

Dans debunked the claims that the bill is anti-tobacco farmers. He presented a study showing that there were 600 excess deaths a year from cancer and 2,000 excess deaths a year from heart disease in tobacco-producing regions.

Dans said that the measure would allocate funds for Universal Health Care that would cover those in the lowest percentile in terms of income and added, “Tobacco farmers are among the poorest in our country. […] The farmers will actually benefit from this measure. By voting against the bill, they [the industry] are putting our farmers’ health in danger.”

Ragos also reiterated sin tax advocates’ call for vigilance.

“We’ve seen how they [the industry] have pitted lives against farmers and laborers just to save their profits. We’ve seen how they, driven by their greed, resorted to lies and fallacies and other manipulative tactics,” said Ragos. “This is a hard-earned victory for the people and this is why we need to be vigilant.”
Dr. Dans’ data on farmers and poverty:
Tobacco land: 32,000 hectares
Estimated pesos earned per hectare: P85,000
Gross income of farmers: P2.7 billion a year
Number of farmers: 55,000
Estimated income per year: P49,000 (per farmer)
Estimated income per month: P4,000 for an average family of 5
Source: National Tobacco Administration/Philippine Tobacco Institute data