MANILA – Simulations jointly developed by the Departments of Finance (DOF) and Health (DOH) along with the World Health Organization (WHO) indicate that the proposal by Sen. Emmanuel Pacquiao to increase excise taxes on tobacco products to P60 per pack will bring down cigarette consumption by 16.8 percent and lead 3.2 million adults to quit smoking.
Pacquiao’s measure – Senate Bill 1599 – is similar to the DOF-DOH proposal of increasing the excise tax on cigarettes, regardless of brand or price, to P60 per pack in the first year of implementation and an additional 9 percent per year thereafter, the DOF said in a statement on Monday.
Finance undersecretary Karl Kendrick Chua said during a recent hearing of the Senate ways and means committee on the proposal that simulations show that the threshold in which the cigarette consumption would prove elastic is to tax it “above P73 per pack. This means that incremental revenue begins to fall if the excise tax rate is beyond P73 per pack.”
But Pacquiao’s proposal of P60 per pack would also be beneficial because it would prompt “the youth, the poor and other price-sensitive cigarette users to stop smoking,” Chua said.
Health Secretary Francisco Duque III told senators evidence shows that the Sin Tax Reform Law of 2012, which raised taxes on alcohol and tobacco products, was effective in reducing smoking among Filipinos.
“The effects, however, have plateaued; making the Philippines the third highest among ASEAN countries in terms of smoking prevalence,” Duque said during the same hearing by the committee chaired by Sen. Sonny Angara.
Duque said results of a simulation exercise developed jointly by the DOH, DOF and WHO estimates that the P60 per pack proposed tax rate will “avert approximately 713,000 deaths, and will result to 3.2 million quitters in adults.”
“This rate will also bring down smoking prevalence to 16.8 percent and help reach our non-communicable disease target,” Duque added.
On top of cigarettes, the DOF and DOH are also asking lawmakers to increase the excise taxes on alcohol and impose a unitary tax system on fermented liquors, which make up the bulk of consumption./PN
