Group hails sin tax law, warns vs tobacco tax evaders

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Calling it an “unqualified step forward,” a regional antitobacco group on Friday lauded the Philippines’ enactment of a “sin tax” reform law, but warned of renewed efforts by the tobacco industry to evade the law.

The Bangkok-based Southeast Asia Tobacco Control Alliance (Seatca) said the tax measure signed into law by President Benigno Aquino III on Thursday was “a victory of the Filipino people, who are the biggest winners with this new law.”

“With the passage of much-needed reforms to the sin tax law, Seatca and our partners in the Philippines and throughout the Asean (Association of Southeast Asian Nations) join in celebrating this victory of the Filipino people, who are the biggest winners of this new law,” the group said in a letter to Mr. Aquino.

“Like you, we believe the new sin tax law is an unqualified step forward that will not only generate significant additional government revenues but also achieve even more significant health outcomes,” it added.

The group said the law would discourage tobacco consumption “especially by the youth and the poor,” reduce disease, disability and premature deaths, save on healthcare costs and serve as a “backbone” for a more efficient health administration in the Philippines.

Public health

The group commended the Aquino administration for its dedication to improve public health.

“We are also particularly pleased that the tobacco farming issue has been well addressed and that 15 percent of incremental revenues are to be allocated to assist tobacco farmers shift to alternative livelihood programs,” it said.

Seatca executive director Bungon Ritthiphakdee stressed that “challenges from the tobacco industry still remain.”

“International experience has shown how cigarette manufacturers have directly and indirectly been involved in smuggling, avoiding and evading tax collection, and interfering in governmental policy implementation,” the group said.

“We therefore need to anticipate the tobacco industry’s attempts to undermine the government’s efforts and the industry’s goal of making the new sin tax law a failure, not only for revenue generation but also for universal healthcare,” it added.

The group urged the government to continue to prioritize public health and initiate more tobacco control reforms to sustain the gains of the new law.

It said the reforms could include “large pictorial health warnings” on cigarette packs and “a more comprehensive ban on tobacco advertising, promotions and sponsorships” in accordance with the World Health Organization’s convention on tobacco control.

Fear of farmers

Ilocano farmers fought hard against the new law, fearing its impact on the next tobacco season, but officials said they had nothing to fear.

Ernesto Calindas, president of the National Federation of Tobacco Growers and Cooperatives Inc., said the farmers had lobbied hard to get the best terms from Congress when it was debating the measure raising excise taxes on tobacco and alcoholic beverages. Members trooped to the Senate to rally against the measure.

Calindas said the farmers needed to make sure they would get appropriate compensation for high tobacco taxes.

The National Tobacco Administration said 55,533 farmers from Ilocos, Cagayan Valley and the Cordillera grew tobacco on 38,275 hectares of farms from 2010 to 2011.

According to Calindas, the farmers now see the benefits they would reap once high taxes are plowed back to the universal healthcare and health insurance programs.

Ilocos Sur, the biggest producer of Virginia tobacco in the country, accounts for more than 40 percent of the tobacco yield.

Ilocos Sur Gov. Luis “Chavit” Singson said farmers need not fear the new law.

“It is only the cigarette manufacturers’ huge gains that will suffer because these will decrease drastically,” Singson said, adding the new law would mean increases in local government shares from the new tobacco taxes. With a report from Leoncio Balbin Jr., Inquirer Northern Luzon

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  • randyaltarejos

    What would be its negative impacts to the tobacco farmers? Will the sin tax law creates an atmosphere that will pave the way for the prices of raw materials to go down? When more people will cut smoking due to spiked prices of cigarettes, this will mean a huge cut in production of cigarettes. This will also mean cut in employment, I supposed.

    • Yul Dorotheo

      Not all people will not stop smoking overnight. Hopefully, the youth will be discouraged from starting to smoke, and the poor will smoke less or quit. Those who can afford to will continue to smoke, and thus tobacco companies will continue to make money, and the government will continue to earn revenues.

      This is unlike with the old law, where the tobacco companies were earning, but the government was losing revenues because of the price classification freeze and the low tax rates, and worse, more and more people could afford to smoke, leading to more addiction and diseases/deaths, mostly among the poor, who are the least able to afford medical treatment and medications.

  • randyaltarejos

    The sin tax law will prop up revenues for the local government units, as Gov. Chavit Singzon claimed, as he warned Ilocos tobacco farmers not to worry about its implementation. But Singzon must have forgotten that this is basically a matter of “supply and demand” equation. When less and less consumers are buying cigarettes, how can Fortune Tobacco buy more raw materials to sustain the requirements of its manufacturing operations? Why would Mr. Lucio Tan manufacture more and more cigarettes when his customers are waning because his products are too expensive to buy?

    • Observer_din

      but sir I think the main purpose of this law to really lessen the smokers, this law is good for the health of our citizens, smokers or non smokers.

    • buttones

      First of all, there are no ‘tobacco farmers’- these farm laborers, which is exactly what they are, work the lands of the owners of that land – probably the cigarette producers, I don’t know. If one is farming, as a owner, say twenty hectares, and find that growing tobacco is not worth the effort then I would switch to a better cash crop- food for one thing be it tomato or beans…There are very few ’farmers’ in PH who own their land, it is owned by corporations and in some cases multi nationals-
      On the issue of increased prices reducing demand – is this really the case? Is there evidence to support this? If government want to raise income to support a flagging, appalling health service, no problem with that.

  • UrHONOR

    BUTI walang angal ngayon ang CBCP sa law na ito na, sa palagay ko, mas magugustuhan nila kung lahat sana ng SINS ay may tax na na…mortal, venial, etc.  Lalong dadami ang marami na nilang madaming-madaming assets. :) 

    • demonYOU

      TSUPAeng ikaw siguro yung pari na sinipa ng cbcp dahil nahuli ka nanghahala ng altar boys at nagalit ka sa kanila dahil hindi ka kinampihan……sabi ko naman sa iyo TSUPAeng wag ka sa loob ng simbahan gagawa ng kamunduhan at magbayad ka na lang meron ka naman kinukupit sa bawat koleksyon…..ayan! di ka nakatiis kaya natimbog ka!

  • Ommm

    ” “It is only the cigarette manufacturers’ huge gains that will suffer because these will decrease drastically,” Singson said”

    And so will government revenues from tobacco…..

  • Observer_din

    This one will surely decrease the number of smokers. Hope this will totally eradicate smoking.. good one

  • http://pulse.yahoo.com/_RCIYU4SIRFQUOUA4JAX2K3S2AU Tommy

    This law will have these good and bad effects: a) discourage some from drinking and smoking  b) encourage some to steal to support the rising costs of their vices c) encourage smuggling of cheap cigarettes and liquor d) more corruption.

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