YES! to Sin Tax
The Philippines has one of the lowest prices for sin products like alcohol and cigarettes. The average price for cigarettes in the country is 27.72 pesos per pack compared to 365.2 pesos in Singapore, 146.08 pesos in Malaysia and 104.84 pesos in Thailand. Beer, according to the World Health Organization (WHO), is the one of the most consumed alcoholic beverage in the Philippines and is similarly very cheap compared to other countries. The affordable nature of these so-called sin products is the very reason why the consumption of which is so prevalent, especially among the price sensitive sectors of society like the youth and the poor. This Republic also has also had great increases in its smoking prevalence rate for all age classifications according to the 2011 ASEAN Tax Tobacco Report Card.
TVIt is an established tenet that smoking is a health hazard. This is even admitted by tobacco companies themselves. It is most evident in the warnings they place in their products. The WHO considers alcohol as one of the leading causes of 20% to 50% of chronic diseases like liver cirrhosis, epilepsy and many cancers. There are measures to control the consumption of ‘sin’ products by taxation but the current Sin Tax law – Republic Act 9334 – has been proven to be ineffective and outdated. To add to the heavy matter, there is a projected deficit in our budget that really needs to be filled and the taxation of sin products is one way of doing it. It is high time that legislative measures be made to protect the health of the people and increase revenue. There is not a more opportune time to do it than now, when the current sin tax’s provision is about to expire and when the health problems of the Republic’s citizens are on the rise.
HB 5727, in short, is a health protection and revenue increasing bill. The prices of sin products like cigarettes are increased to a very high cost to discourage the youth and the poor from buying them. The exorbitant increase in taxes is fair and not illegal. The government is in its right to do so to protect its citizens’ health. Even if you increase the prices of sin products to a very high rate, some consumers will still buy these products and help offset the loss of revenue that came from the youth and the poor’s consumption according to a study by Filomena Sta. Ana of the Action for Economic Reform. And so while consumers from certain sectors of society will still buy sin products and thereby help raise revenue because of raised taxes, the youth and the poor – as constituents of the majority and primary target sectors of society – will consequently be discouraged from further consumption of said highly-priced produces. Downshifting, or switching to cheaper products, is prevented by greatly increasing the tax of low-priced brands while high-priced brands are taxed a lower rate thus equalizing their prices and giving no alternative to those seeking cheaper brands.
The case of smuggling is the primary concern of anti-smuggling laws and law enforcement. The Sin Tax Bill should be focused on the two-pronged objectives of health care and revenue increase. This is not to say that smuggling and other illegal activities that can result from the implementation of the bill should be ignored. Are we to stop the implementation and enforcement of laws with the threat of those who will go against it? Of course not!
The bill also seeks to aid the people affected by sin products. 85% of the projected revenue collected will be used to fund the government’s Universal Health Care System while the remaining 15% will be used to aid tobacco farmers to shift to alternative crops. The bill will support those who have no or little means of getting medical treatment due to alcohol or tobacco related illnesses and help reduce the production of tobacco to ultimately reduce consumption without totally depriving the industries and people who depend on alcohol and tobacco as their livelihood.
HB 5727 has been passed by the House of Representatives. The DOH and DOF, among others, have also shown their support. Other benefits from passing the bill into law include better credit ratings which will allow the country more options for other financial opportunities and the fulfillment of our international responsibilities to lower tobacco consumption.
While its consequences should be hard-hitting and implementation of the bill will be tough, it has to be done. One has to crack a few eggs to make an omelet.