Officials of the Department of Health never failed to put at the top of the DOH list of accomplishments under the Aquino (Part II) administration, well, the passage of the “sin tax” law in Congress way back in 2012.
It was indeed a great mystery to the guys down here in my barangay why an act of Congress could suddenly become an accomplishment of the DOH, but at that time the DOF joined the administration lobby for punitive taxes on cigarettes as a health bill.
By making the price of cigarettes prohibitive, in other words, the DOH wanted to make smoking less affordable to the public, arguing that it would eventually lead to an overall improvement in the health of the population. Now, more than a year after the implementation of the new “sin tax” law, the DOH typically commissioned the SWS (Social Weather Stations) to do a survey on the incidence of smoking in the country.
But of course the DOH officialdom chose to highlight some “favorable” findings in the survey, such as the reduction of smoking among the poor and the youth, which were the sectors that the DOH claimed to be its target groups, in the first place. Hmmm. It is just that, based on the same SWS survey, reports also noted that the prohibitive prices of cigarettes under the “sin tax” law hardly reduced the prevalence of smoking in the country—meaning, we were still addicted to cigarettes.
Now the DOH officialdom speculated that, even with the prohibitive increase in prices of cigarettes brought about by the “sin tax” law, many smokers merely switched to less expensive brands. Incidentally, for several months now, the Department of Finance has been egging the BIR to investigate this company called Mighty Corp., a maker of low-priced cigarettes based in Bulacan, owned by the Wongchungking family, for massive tax evasion.
For most of 2013, or the first year of the “sin tax” law, Mighty was able to flood the market with cigarettes at a giveaway price of only P14.70 a pack—despite an excise tax of P12 a pack plus VAT of P1.58 a pack, leaving the company with only P1.12 a pack to cover for cost of manufacturing and distribution, not to mention its profit margin.
The DOF found such a pricing scheme highly implausible, unless of course Mighty went into the highly lucrative cigarette manufacturing business just to lose tons of money, considering that it cornered more than 30 percent of the entire market. The only explanation, at least the one coming from DOF officials, including Finance Secretary Cesar Purisima, was that Mighty cheated on the excise tax, even estimating its tax liabilities at about P10 billion for the first half of 2013 alone.
Interestingly, the BIR actually missed its “sin tax” collection targets during the first several months of 2013. Even more mysterious was this: While the BOC already filed cases against Mighty, our sources said that the BIR has yet to start its investigation.
The story of Mighty, as a cigarette company performing miracles in the “sin tax” law, could be gleamed from the SWS survey, which showed that 45 percent of smokers switched to another brand of cigarette with the tax-induced price increases. For the truth behind the DOH claim of “sin tax” being a health bill was, well, the measure could only bring about the element of prohibitive cigarette prices. For one, it was already established in other countries that, while pricing could be an important factor in the fight against smoking, it was not the biggest one.
Look, boss, cigarette companies could always make cheaper brands since they always could cut costs by smuggling raw materials or through cross-border illicit trade to avoid the high excise taxes and the VAT. The story of Mighty precisely just showed us that cigarette makers also could go around the prohibitive taxation of the government with a little help from some friends in the administration and in Congress.
And there we are again with our problem in implementation!
Still, the DOH could claim that the “sin tax” law brought some tangible health benefits to the country because the Aquino (Part II) administration in fact fulfilled its promise to use part of the tax collection for health care. Indeed, the DOH officialdom crowed about the P45.1-billion allotment in the DOH budget as a result of the “sin tax” law. The DOH also was proud to say that it used P25 billion of it to expand the coverage of the government health insurance, which was the baby of our leader Benigno Simeon (aka BS), because his boys wanted a “universal health care” program in the country, apparently to help the poor obtain “automatic” medical attention when they needed it
Of course the Aquino (Part II) administration forgot to mention that, during the cute administration of Gloriaetta, our government was able to expand the health insurance coverage to more than 54 percent, and the DOH under our leader BS merely increased it to 81 percent.
Now, the expanded insurance coverage only meant that more people could get medical attention, but the question was always, well, what kind of treatment could we get from government hospitals. For the fact remained that we, as a people, are getting sicker than ever, as shown by official figures on our mortality rate, which in 2009 went up to a worrisome 109.4 (number of people dead) per 100,000 population, while the rate was only 62.6 per 100,000 in 1983.
Over the years, in other words, something has gone wrong in our health as a people. In recent years, for instance, diabetes and renal failure zoomed up to become the top 10 diseases and killers in this country.
And the “sin tax” law simply targeted cigarettes, even going soft on alcoholic drinks. Well, one of the top killers in this country happened to be “accidents,” which could be partly due to poor infrastructure and lack of traffic discipline, including drunk driving.
And what about the sugary drinks, some of which were passed off as “health” beverage by big business in this country, which medical science claimed to be one of the leading causes of diabetes (also a top 10 disease), which could also lead to renal failure (also a top 10 disease)—why did the alleged “health bill” called “sin tax” purposely overlook the imposition of punitive taxes on them?