Press Release – Action for Economic Reforms— May 22, 2012

CIVIL SOCIETY advocates today thumbed down entreaties by PMFTC and the Philippine Tobacco Institute (PTI) for lawmakers to allow further concessions on the Abaya sin tax bill. Against the rhetoric of tobacco industry players, the advocates claimed, the interests of the sectors stand resoundingly for extensively reforming the Philippines’ present cigarette excise tax system.

“We are firm in believing that HB 5727 will overwhelming benefit the sectors that will be impacted by this bill— farmers, the youth, the poor, Filipina mothers and other tobacco consumers,” said Jo-Ann Latuja, senior economist of Action for Economic Reforms. “In truth, all these sectors will be the biggest losers of a failure to legislate considerable sin tax restructuring.”

Immediately after HB 5727 scored past the Lower House committee level on May 9 with a landslide 46-14 vote, PMFTC and PTI implored solons to seek only “moderate and reasonable increases” in the proposed tax reforms. “What is important is that our legislators are open to hearing the side of stakeholders,” maintained Chris Nelson, president of tobacco giant PMFTC.

Yet a more careful look at many of those same stakeholders reveals that they have deep reason for supporting substantial— not “moderate”— changes in the tax system.

“In fact,” argued Latuja. “The Abaya bill, if passed, will largely benefit tobacco farmers. Not only will they be recipients of livelihood programs that will be funded by the new tax scheme’s incremental revenues. They will also receive higher selling prices for their products as the bill will open doors for new buyers in the local tobacco market.”

The same reforms, argued Dr. Maricar Limpin, executive director of the FCTC Alliance of the Philippines (FCAP), would be no less essential for stemming the nation’ epidemic rise in tobacco-related diseases. “Smoking is the number one cause of death in the country,” she said. “Yet most people simply aren’t aware that those who suffer most of these are poor, and increasingly, young Filipinos.”

“Those who seek to prevent the passage of firm sin tax reforms, like the Abaya bill, are openly hazarding the health and lives of at least 17.3 million Filipinos smokers,” she added. “Even worse, it will often be the mothers of smokers’ families who will be forced to shoulder most of the financial and social burden of these diseases while the tobacco companies like PMFTC will reap enormous profits at their expense.”

“Passing HB 5727 is an absolute must for the health and livelihood gains it offers, yet it should also be supported for the economic bonuses it will realize for the Philippines as a whole,” noted Ricardo Balatbat, executive director of the Foundation for Economic Freedom.

“By approving the bill, the government stands to gain another estimated P33-B in revenues, enlarging our fiscal space for delivering better infrastructures and services to Filipinos, while also improving our government’s macroeconomic fundamentals. Our lawmakers have a prime opportunity to lay the foundations to jumpstart a cycle of inclusive growth by safeguarding the integrity of this bill,” he said.

The civil society groups are one in asserting that HB 5727, if shielded from dilution by PMFTC and PTI, will bring indisputable “wins” for the health, development, and long-term prosperity of the Filipino people. If legislators are committed to benefitting the real stakeholders of the sin tax issue, stressed the advocates, they would do well to uphold its prompt and secure passage.