Press Release – Action for Economic Reforms – 3 September 2012

Renowned experts on health and tobacco control urge Upper House legislators to pass a sin tax with a uniform specific tax that achieves the objectives of increased revenue and more importantly, health.

In the 2012 study which he co-authored with experts from the University of the Philippines, the Department of Health and the University of Illinois in Chicago, Chaloupka and his colleagues stated, “Levying a uniform specific excise tax of 30 pesos per pack would reduce consumption by 46% and raise 53.3 billion pesos in new revenues.” The study further cited a total reduction of 3.82 million premature deaths from smoking or 26% of premature deaths averted if the bill is passed.

In addition, a uniform specific excise tax of 30 pesos would prevent an estimated 4.6 million of the youth from picking up the habit and avert almost 2.3 million premature deaths. Smoking prevalence in lower income households would also decrease dramatically and funds normally spent on tobacco products would be otherwise spent on other necessities.

Citing the study of Chaloupka and colleagues, Jo-Ann Latuja, economist of Action for Economic Reforms, thus allayed fears of Senator Ralph Recto that a high tax rate will mean lost revenues for government. “It is clear from the study that an additional 53.3 billion pesos will be generated from a unitary tax of 30 pesos,” said Ms. Latuja.

Previous sin tax bills and other forms of policy interventions did little to practically nothing to diminish a smoking prevalence that has prevailed throughout a span of 15 or more years. The current Sin Tax Law only facilitated cigarette affordability and contributed to the significant rates of smokers in the youth and the poor, as well as to the 240 deaths of Filipinos every day.

The paper also recommended annual adjustments to inflation so that they retain their real value over time and earmarking a portion of revenues for health purposes and those engaged in tobacco-dependent livelihoods to make the transition to other livelihoods.

So far, Senator Miriam Defensor-Santiago’s Senate Bill 3249 contains all the essential features advocated by Chaloupka and his colleagues. SB 3249 has also garnered the support of the Department of Health, the Department of Finance, the Philippine College of Physicians, and the Philippine Tuberculosis Society Inc., just to name a few.