A year of sin tax: More work ahead

Even with an increase in excise taxes since the sin tax law was enacted, the country's cigarette and tobacco prices are still among the lowest in the world

MANILA, Philippines – What doomsday?

Health advocates on Friday, December 20, said that exactly a year after the “game changer” Sin Tax Bill was passed into law, evidence still trumps the lies and myths propelled by critics to undermine the legislation.

One such “doomsday announcement” is the death of the tobacco industry.

“[The] doomsday announcement then [was that] industry will die. Mamamatay ang industriya, mawawalan ng trabaho ang maraming employees ng tobacco and alcohol companies (The industry will die, and many employees of tobacco and alcohol companies will lose their jobs),” senior economist Joann Latuja-Diosana of health group Action for Economic Reforms (AER) said.

But they’re still here, Diosana said, and tobacco companies continue to thrive although the sin tax obviously had effects on their revenues. (READ: Sin tax collection exceeds government’s target)

In a factsheet provided by AER, the group cited two examples: Philip Morris and Mighty Corporation.

  1. As of September 2013, Philip Morris’ market share remains at a considerable 77.2%, a drop from 90.8% in 2012.
  2. The unprecedented increase in the market share of Mighty Corporation is considered the most significant development in the market. Shares allegedly grew from 7% to 20% because of its low-priced cigarettes in less than a year.

The group added that the displacement of tobacco farmers “failed to materialize,” with production and exports of tobacco leaf boasting of even more robust figures.

According to AER, domestic production is expected to grow from 65 million kilos in 2012 to 70 million kilos in 2013 (8% increase) despite imposing higher excise taxes, while earnings of tobacco leaves even grew by 58.5% to $75.8 million as the volume improved by 23.5% to 39.9 million kilos.

GAMECHANGER. DOH Undersecretary Ted Herbosa (R), BIR Commissioner Kim Henares (C) and Rep Isidro Ungab during a forum on the sin tax law. Photo by Jee Geronimo/Rappler

Societal responsibility

Just as one year is too early to measure the public health impact of sin tax on Filipinos, hoping for smoking prevalence to drop overnight is “like dreaming.” (READ: A year of sin tax: Too early to assess public health impact)

“[The death of the industry] can possibly happen, but it will take several years…But this will not actually happen in our lifetime. We would be gone by then, but we won’t see zero prevalence of cigarette smoking in the country. It will take a long long time,” Maricar Limpin of the Framework Convention on Tobacco Control Alliance, Philippines (FCAP) said in a mix of English and Filipino.

The market still exists, Limpin said, and very large at that. In fact, the Philippines is still seen as a good market, she said. Rep Isidro Ungab added, the country’s prices are still among the lowest in the world.

A Department of Health (DOH) survey among Cotabato teens also showed that despite the higher excise taxes on cigarettes, 41 of 309 respondents or 13.3% increased their consumption.

“Interestingly though, some smokers increased their consumption, kahit tumaas. So you will have both: people who will still continue to smoke despite the high cost. Yun yung mga addict na talaga kasi ‘pag addict na talaga kahit magkano, babayaran po nila yun,” Health Undersecretary Ted Herbosa said.

(Interestingly though, some smokers increased their consumption even if [taxes] increased. So you will have both: people who will still continue to smoke despite the high cost. Those are really the addicts, because for the addicted, whatever the price, they will pay.)

The challenge is to bring in more stakeholders – not just health advocates – to improve the changes that began since the sin tax law was enacted.

“Today, we know lifestyle is not a choice but a response to environment…The new concept of lifestyle: let’s change the environment. If that’s what we want to do, health needs to go out of the health sector; [it is] a responsibility of [a] whole society,” said Antonio Dans, president of the Philippine Society of General Internal Medicine, in a mix of English and Filipino. – Rappler.com

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