Gatchalian wants higher tax on tobacco to curb its consumption

Sen. Sherwin Gatchalian. PHOTO from Office of Senator Sherwin Gatchalian

MANILA, Philippines — Increasing the tobacco tax to P70 per pack could curb cigarette consumption among Filipinos and would raise funds for the Universal Health Care (UHC) programs of the government, Senator Sherwin Gatchalian said Tuesday.

In filing Senate Bill No. 2177, Gatchalian is pushing to further increase the tobacco excise tax after expressing alarm that Filipinos’ liking for cigarettes remained high despite the current P35 per pack excise tax on tobacco.

“The failure of the current excise tax to produce a significant drop in daily cigarette consumption shows the inelasticity of demand for cigarettes,” Gatchalian said in a statement.

He noted that data from the Global Adult Tobacco Survey from 2009 to 2015 showed that the implementation in the country of the P35 per pack tobacco excise tax resulted in only five-percent reduction in the number of Filipino smokers. The same data showed that the average number of cigarette consumed per day has increased marginally from 10.6 in 2009 to 11 in 2015.

“Such figures show that while the prevalence of smoking among Filipinos has decreased, the intensity – as shown by the average number of cigarettes consumed per smoker per day – did not. This situation prevailed even if the tax burden on consumers almost doubled during this six-year period,” the senator said.

Gatchalian’s bill seeks to increase tobacco excise tax to P70 per pack by 2020, followed by a nine-percent annual increase in succeeding years. The senator said this is the optimal rate that would give the government the maximum revenue.

If approved, his proposed rate would  mean additional  P79.03 to P114.03 tax  per pack of cigarettes.

The senator said that with the implementation of the P70 per pack tax hike, the government is expected to generate an estimated additional revenue of P35 billion to P45 billion and another P5 billion to P6 billion when the nine percent annual tax increase on tobacco products will be implemented

Gatchalian also pointed out that the bill aims to decrease the current number of smokers by one million; reduce the numbr of premature deaths of current smokers by half a million; avert 600,000 future smokers from 10.7 million to 10.1 million; and prevent premature deaths of future smokers by 200,000 from 5.3 million to 5.1 million.

He added that the excise tax hike on tobacco products would help finance the funding of the UHC bill, noting that the Department of Health estimated that P27 billion is needed to implement the UHC on its first year, with an average additional amount of P90 billion to P100 billion per year.

“This legislation will help raise the needed revenues to sustain and enhance the proposed primary care system for Filipinos, while promoting better health and healthier lifestyles,” the senator said. /jpv

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