Press release – Action for Economic Reforms – 18 November 2012

No less than two of the top finance organizations in the world, the International Monetary Fund (IMF) and the Asian Development Bank (ADB), have expressed support for a new Philippine sin tax bill.

On Friday, International Monetary Fund (IMF) managing director Christine Lagarde said a new sin tax bill would be a step in the right direction for the country.

In addition, the ADB said in a recent report that an increase in tobacco taxes ranging from 70 to 133 percent could reduce the number of smokers by 67 million. This would also reduce deaths related to smoking by more than 27 million.

Filomeno Sta. Ana III, coordinator of Action for Economic Reforms, welcomed the position of international or multilateral organizations in support of the sin tax reform, which now finds expression in the Drilon-Santiago bill. “The World Bank (WB), the International Monetary Fund (MF), The Asian Development Bank (ADB) and the World Health Organization (WHO) have all spoken about the importance of the sin tax reform. Surely, our lawmakers will see the recent statements of the IMF and ADB and previous statements of WB and WHO as an endorsement of the administration’s sin tax bill.”

Sta. Ana observed that “rarely can one find an opportunity where an issue unites a broad coalition of civil society, politicians and multilateral institutions. The sin tax reform is one such issue.”

“The few senators who propose or will oppose the sin tax reform will only isolate themselves from the majority of stakeholders,” he added.

In a press conference in Malacanang Friday, Legarde explained that the sin tax bill would be a transparent way to raise revenues.

“If the so-called sin tax is voted on Monday, that will be great progress,” she said. “Let’s hope that this bill will be voted on Monday, and that tax collections will result from this piece of legislation.”

Lagarde is on a two-day visit to discuss the role of the Philippines in helping resolve the global economic crisis.

She also praised local finance officials for buoying the country’s economy despite the global economic downturn.

“This year 2012 is a very difficult time because of the financial crisis in other parts of the world. The Philippines is the only country of which we have increased the growth forecast as opposed to other places in the world where we have decreased the forecast,” she said.

Finance officials have been pushing for the sin tax bill which aims to raise around P40 to 45 billion in revenues. The Philippine Senate is deliberating the bill that seeks to raise taxes on tobacco and alcohol products.

In its report released on Tuesday, the ADB also said the Philippines is one of the countries that would suffer the biggest numbers of smoking-related deaths if there was no government intervention.

It also said that a 25% to 100% increase in the prices of cigarettes could raise the country’s Gross Domestic Product (GDP) from between 0.11% to 0.53%