Sin tax acid test for senators
Sen. Ralph Recto, who chairs the Senate ways and means committee, came out with their report earlier this week on their proposed version of the sin tax bill, which is intended to raise taxes on tobacco, beer and other alcoholic drinks, not only for revenue purposes but also to deter Filipinos from getting all sorts of diseases including cancers and heart diseases from smoking and excessive drinking.
Senator Recto may have tried hard, but surely in vain, to rationalize their proposal, calling it a “reasonable, realistic and responsible” implementation of the sin tax bill. “In pegging revenue yield, we adopted a conservative framework that we believe hedges closer to reality. The problem with forecasting revenues using rosy lenses is that they often leave the government in the red,” he explained.
The highly watered down version aims to generate P15 billion in incremental revenues in the first year compared to the P60 billion which was originally intended, based on the tax rates proposed by the Department of Finance. The Senate version looks like a “pakonswelo (consolation)” version to appease sin tax advocates, but the way it looks, it’s more of an insult than a source of comfort.
Risk factor
Smoking is a risk factor for six of the eight leading causes of preventable deaths, and these diseases are predominantly present in low- to middle-income countries, like the Philippines. Here, smoking is a major risk factor in causing the top four killers, namely, heart attacks, strokes, chronic obstructive lung diseases such as emphysema and bronchitis; and cancer of the lungs, airways and gastrointestinal tract. We hope Senator Recto and his colleagues in the ways and means committee had these facts in mind when he described their report as “reasonable, realistic and responsible.”
Sin tax advocates labeled the proposed Senate version as the “Recto Morris” report, obviously referring to the Phillip Morris brand which tend to benefit from this proposed revision. I’m not sure if I understood it right after reading details of the report at least five times, but the tax on premium cigarettes would even be reduced to P14—representing a 51-percent drop in excise tax due per pack on the first two years. That would probably encourage smokers to shift from low-priced to premium types of cigarettes, as if the latter would be less of a health hazard than the cheaper brands.
The sentiments of the sin tax advocates are understandable. I share the same frustration and disbelief that our good senators can’t seem to see the rationality and urgency of passing the sin tax bill as it was originally proposed. Volumes of scientific evidences of the health hazards of smoking and excessive drinking have been presented to them, but apparently the science of medicine can easily be washed away by a potent avalanche of a combination of nicotine and ethanol.
‘Smokingest’ country
The Philippines is already the “smokingest” country in Southeast Asia based on World Health Organization data, and one likely reason for this is the relatively low prices of cigarette and cigarette taxes in the Philippines. Filipino boys and girls are also at the forefront compared with their other peers in other Southeast Asian countries in deriving pleasure from smoking. The Senate version of the bill will hardly change these facts.
Why can’t our senators seem to understand that tobacco is causing the country much more to spend than whatever revenue it’s generating. Our country is spending some P177 billion in terms of direct and indirect costs for the four leading smoking-related diseases, namely: lung cancer, chronic obstructive pulmonary disease, coronary artery disease and cardiovascular disease.
The bottom line is that smoking-related deaths are higher than hypertension, diabetes, high cholesterol levels, accidents, typhoons and other natural calamities combined. We may not make all smokers lick the habit, but we must exert all measures to convince them to stop or deter nonsmokers from ever starting the vice.
In everything in life, we don’t have to reinvent the wheel. We look at success stories or best practices elsewhere and try to do the same in our local situation. Thailand used to be a “smoking leader” too in Southeast Asia before. Then in 1991, it passed its sin tax law and progressively increased the tax rate on tobacco in a series of eight steps, increasing the retail prices of cigarettes up to 400 percent, accounting for a drop in the smoking rate from 30 percent in 1992 to 18 percent in 2007.
The sin tax bill is an acid test for our senators. When so much lives are at stake, and one still decides to look the other way for expediency—or worse, for financial pragmatism—that can be a self-defining moment of the type of person one truly is. Whichever way they vote on the bill can either haunt or comfort our senators years from now, probably in their sunset years, when they’re already retired and making an account of themselves on the decisions they had made that mattered most.
Let’s pray for our senators for enlightenment and guidance. Write to them, call their office landlines which are usually provided in their websites, and make them know how you feel about this issue. Let’s make them realize that the proposed senate version of the sin tax bill is not “reasonable, realistic and responsible.” Well, not enough.
