On the occasion of this year’s World No Tobacco Day, the Sin Tax coalition lauds government for protecting the gains from Sin Tax reforms, including combating illicit tobacco trade.
The coalition notes that the Bureau of Internal Revenue (BIR) has taken concrete steps to contain illicit cigarette trade. Last year, BIR put Mighty Corporation’s factory and warehouses under 24/7 surveillance and further investigation in the wake of allegations that Mighty Corporation was engaging in illicit trade.
Moreover, BIR has started to implement the Internal Revenue Stamp Integrated System (IRSIS) that mandates all cigarette packs from importers and local manufacturers to bear tax stamps, a mechanism to track and trace tax-paid cigarettes and prevent illicit trade.
The dominant player, Philip Morris Fortune Tobacco Corporation (PMFTC) has complained loudly about the rise in illicit trade, but government and civil society organizations like Action for Economic Reforms (AER) questioned PMFTC’s dubious methodology and the massaging of data to manufacture a conclusion that serves its vested interests.
“Independent of that, the BIR initiatives were timely and appropriate,” said AER Economist Jo-Ann Diosana. “The BIR acted immediately on these issues by releasing a memorandum circular for the implementation of the tax stamp system,” she added.
BIR Commissioner Kim Henares also noticed a significant increase in excise tax collections in the first quarter of 2015, following the IRSIS.
Government has shown its resolve to fight illicit trade. The civil society Sin Tax coalition recalls the statement of Sin Tax bill sponsor Sen. Drilon during the intense deliberations then: “Smuggling is not solely the function of price; it is the function of more of law enforcement”.
On the other hand, the senators who opposed the sin tax claimed that increasing tobacco taxes would not result in the projected revenues due to the threat of increased cigarette smuggling. Among them were Senators Recto, Enrile, and Marcos who then said it “will cause all kinds of problems”.
“The claim of the anti-Sin Tax senators has been debunked by the facts”, said Dr. Anthony Leachon of the Philippine College of Physicians. “The government had been collecting tobacco tax revenues that are consistently exceeding government projections”, recalled Dr. Leachon.
In 2014, the sin tax facilitated the allocation of the biggest budget increase in the history of the Department of Health (DOH). This year, BIR Commissioner Kim Henares predicts that the target incremental revenue of Php 50.63 billion for 2015 would also be surpassed.
“Smuggling is an issue that has to be approached with utmost vigilance,” warned Dr. Maricar Limpin of FCTC Alliance Philippines, pointing to some legislators’ reliance on the Philip Morris-commissioned study on illicit tobacco trade conducted by the International Tax and Investment Centre (ITIC). “World Health Organization (WHO) has been warning the public about the proven ill intention of ITIC, who, for the past years exhibited the same stance in favor of the tobacco industry across countries,” she added.
The Sin Tax coalition also joins the call for the ratification of the Protocol to Eliminate Illicit Trade in Tobacco Products to strengthen tobacco control measures, such as the Sin Tax Law, to effectively curb the tobacco epidemic.
The Sin Tax Coalition is composed of civil society organizations, medical professionals, health advocates, economic think-tanks, and youth organizations, that supported the passage of the Sin Tax Reform Act (RA 10351).
Action for Economic Reforms (AER)
FCTC Alliance, Philippines (FCAP)
New Vois Association of the Philippines (NVAP)
Philippine College of Physicians (PCP)
Philippine Society of General Internal Medicine (PSGIM)
WomanHealth Philippines Inc.
Youth For Sin Tax (YFST) and its member organizations