Group hails sin tax law, warns vs tobacco tax evaders

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