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US policy proves PHL sin tax bill on the right track — Finance chief

September 11, 2012 1:36pm
The United States was able to reduce tobacco consumption by increasing taxes, a policy the Philippines should not hesitate to emulate, a Philippine official said Tuesday.
Citing a USA Today article – “Tax Hike Cuts Tobacco Consumption” –Finance Secretary Cesar Purisima said the US policy move proves that higher taxes can significantly reduce cigarette consumption.
The US experience shows that the Aquino administration is on the right track in pushing for higher taxes on alcohol and cigarettes, Purisima noted. “The US experience proves that higher taxes can reduce tobacco consumption and at the same time increase revenues.”
According to the USA Today article, the federal cigarette tax jumped to $1.01 per pack on April 1, 2009 from 39 cents to finance expanded health care for children.
The article written by Dennis Cauchon noted that higher taxes resulted in at least $30 billion in additional revenue.
“The tax hike has helped restart a long-term decline in smoking that had stalled in recent years. About 3 million fewer people smoked last year than in 2009, despite a larger population,” the article read, citing surveys by the Centers for Disease Control and Prevention.
The Philippines will replicate the US experience in the use of revenues to be raised from higher sin taxes, Purisima said. “Just like the US, we will use the increased revenues to fund public health.”
The Finance Department is lobbying for the Senate to approve its counterpart version of a bill that seeks to raise taxes on alcohol and cigarettes and to shift to a unitary tax regime from the current multi-tiered system.
The House of Representatives already approved its version in June, indicating revenues to be raised from a unitary tax rate were estimated at P31.35 billion in the first year of implementation.
According to the House measure, at least 85 percent of revenues from the new sin tax would go to health services that include health coverage for indigents and the informal sectors under the National Health Insurance Program.
Tobacco farmers adversely affected by the measure would get 15 percent. — VS, GMA News
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