PHL exceeds revenue goal for sin tax in first year with P34-B collection

The government raked in P33.96 billion in additional revenues during the first year of implementation of the Sin Tax Reform Law in 2013, but it remains to be seen if the parallel intent of the measure – to discourage smokers from buying cigarettes that have become more expensive – was also as successful as the financial goal.

"The goal for 2013 is over P33 billion in tax collection from sin products and, from what we predicted, our collection is better," Bureau of Internal Revenue commissioner Kim Jacinto-Henares told GMA News Online on Friday.

 

Of the additional revenues in 2013, the BIR said 15 percent will support tobacco farmers and the industry in general, and 85 percent will go to the Health Department's budget.

A huge chunk, or 80 percent of the health component, will pay for the Universal Health Care Program while 20 percent will be used to enhance health care facilities.

Lower smoking rates?

 

But higher taxes on sin products do not necessarily translate to fewer people indulging in their nicotine addiction, Former Health Secretary Francisco Duque III said in an interview on GMA News' "News To Go" on Friday.

 

"Hindi naman pwedeng mangyari lamang na tumigil dahil itinaas ang presyo ng sigarilyo... Dahil itinaas... ang buwis ay hihinto awtomatiko o hihina ang paggamit ng tabako," he said. 

 

Francisco Olivar, a taxi driver who smokes a pack of cigarettes a day, said he might stop smoking with the impending increase in cigarette prices this year. "Mabigat na 'yun, titigilan na namin 'to," he said.

 

Another taxi driver, Crisanto Dagohoy, who has been smoking for 20 years, said he might simply reduce the number of cigarettes he smokes in a day. "Sa bundok, ito ang libangan namin doon... sa lamig," he said.

Smuggled cigarettes

 

In the second year of the sin tax law, low-priced cigarette brands will carry a P17 excise tax from P12 last year. Meanwhile, high-priced brands will bear a P25 excise tax, raising tobacco product prices by at least P5 per pack starting January 1, the BIR said. 

 

One of the deterrents to curbing cigarette smoking could be the availability of illicit cigarettes in the market – a blow to the law's health goal. These tobacco products are mainly smuggled, which means no excise taxes were paid for them. 

 

"Kailangan bantayan din ang smuggling ng sigarilyo dahil magiging hadlang sa tagumpay ng pagpapatupad ng batas," Duque said.


Howl raised vs. untaxed ciggies

 

Last June, LT Group Inc. pushed for stricter monitoring of illicit cigarettes, after observing that the company's tobacco business was getting undermined by untaxed and smuggled tobacco products.

 

Revenues from the group's tobacco business plunged 40 percent in the first half of 2013, its president Michael Tan told reporters in a briefing on Jun 19, 2013.

 

Cigarette maker PMFTC Inc. is a joint venture between Tan's Fortune Tobacco Corporation, which holds a 49.6 percent stake in the subsidiary, and Philip Morris Philippines Manufacturing Inc., which owns a 51.4 percent equity interest in PMFTC.

 

The joint venture is licensed to use the cigarette brands Marlboro, Philip Morris, Fortune, Hope, More, Winston and Champion. 

 

"Kung babahain ang merkado ng murang sigarilyo na 'di nagbabayad ng buwis dahil walang tax dahil smuggled, 'yan  ay salungat sa layunin ng sin tax law," Duque noted.

 

The government must impose stricter monitoring of smuggled tobacco products, the former Health official said.

 

"Kailangan pulungin ang lahat ng ating mga ahensya -- of course ang Department of Finance, Department of Health, Bureau of Internal Revenue, Bureau of Customs... dapat sila ay magpulung-pulong para pag-usapan ano pa ang paraan para mapaigting pa ang ating programa na pababain ang smoking prevalence," Duque said.

 

Apart from monitoring, Duque said government – particularly the Health Department – should also push for a broader marketing campaign against smoking. 

 

The Philippines is one of 168 signatories to the World Health Organization Framework Convention on Tobacco Control (FCTC) which requires parties to "implement large, rotating health warnings on all tobacco product packaging and labeling."

 

The caveat "Smoking is dangerous to your health" printed on cigarette packs is in compliance with the FCTC.

 

"Massive marketing campaign to the grassroots level... dapat ganun ang isipin at 'di pabugso-bugsong kampanya lang," Duque said.

 

"Dapat sustained, dapat tinutustusan ito, dapat ipaliwanag ang masamang epekto sa kalusugan at ang malaking uubusin na pondo ng pamilya pag isa sa kanila ay nagkaroon ng sakit dahil sa mahabang panahon na paggamit ng tabako," he added. – VS/YA, GMA News