Harm reduction and taxation can go together

Last weekend, I attended the 1st ASHRA Congress: Harm Reduction in the Asia-Pacific Rim, at the Sapporo Convention Center in Sapporo, Hokkaido, Japan. It was organized by the Asia-Pacific Society of Harm Reduction and Addiction (ASHRA), composed mostly of physicians, psychologists, neurosurgeons, psychiatrists and other health professionals.

One panel that I like was a lunch time session on Day 3. The panel chairperson and moderator was professor Ton Szu-Hsein Lee from the Department of Health Promotion and Health Education of the National Taiwan Normal University (NTNU), and who is also the ASHRA president.

The three speakers were Hideki Makihara, president and CEO of Dream Platform Inc. and a lawyer in Japan and New York. He is also Japan’s former Minister of Justice, former State Minister of Health, former State Minister of the Economy, Vice Minister of Environment, and former Member of the House of Representatives (LDP). Very impressive political and corporate credentials.

Then Dr. Hiroyuki Terawaki, director of Clinical Laboratory Department at St. Luke’s International University Hospital in Japan, and also a professor at Fukushima Medical University. And Dr. Mohd Fadzi Mohamad Isa, an addiction psychiatrist at Hospital Kuala Lumpur in Malaysia.

Hideki said “autonomy, protection and taxation have coexisted in Japan’s tobacco policy framework.” Autonomy refers to adult smoking as personal autonomy and freedom of preference; protection refers to prohibiting people under 20 years old from smoking and entering designated smoking areas; taxation is self-explanatory, about public finance.

This is something that the Philippines and many countries have followed but some sectors still want tobacco prohibition, whether burning cigarettes or vapes or heated tobacco products. Unfortunately, the same groups, including doctors that want such ban, are also very dependent on tobacco tax for their health advocacy.

Let me cite a statement and numbers.

Executive Secretary Ralph G. Recto, when he was still secretary of the Department of Finance (DOF), said during the Secretary’s Hour Toast Remarks on April 30, 2024:

“And if you examine our tax collection spreadsheet through the years, there is one entry common in all eras, and that is the heavy reliance on sin taxes. So much so that in 1912, when we were already under American rule, alcohol and tobacco combined for almost P9 million of total revenue take of P31 million. In short, vices financed the virtues of democracy the Americans were preaching.”

So way back in 1912, P9 million out of P31 million or 29 percent of total revenues were from alcohol and tobacco. Fast forward to 2025, out of BIR’s total revenue of P3.11 trillion, P121 billion came from alcohol and P151 billion came from tobacco products, or tax money from drinkers and smokers was nine percent of total BIR revenues.

That is big, both a century ago and today. The health activists and doctors who hate alcohol and tobacco must recognize and thank the drinkers and smokers of legal products, and help discourage their shift to illegal and illicit products that are sold very cheap but contribute zero to the government tax revenues.

Dr. Hiroyuki Terawaki in his presentation titled “Wellness, Smoking and Social Circumstances in Japan,” said safety and liberty, public health framework should consider both dimensions of wellness. “Safety or physical wellness is reducing avoidable harm and protect health; Liberty or mental wellness is preserving agency, dignity and personal choice.”

I like his viewpoint, starting from daily stress of modern business and living that require relief and recovery, to wellness as practical stepping stones toward well-being which is the ultimate purpose of modern citizens.

People go for outdoor adventures to de-stress like high speed cycling, fast downhill rides, steep mountain climbs, big waves surfing, etc. All of which can cause harm when accidents happen. Or they may prefer indoor activities like overnight karaoke singing or dancing with alcohol, tobacco and recreational drugs, which can cause harm when taken in high quantities.

The point is to respect and encourage individual liberty and personal choice in work, adventure, destress and recovery activities that do not harm other people. Go for harm reduction on those adventures and activities, like wearing helmets, kneepads, reliable ropes in rock climbing, etc.

Government prohibitions and over-regulations should be limited to behavior that will cause harm to other people – like murder, stabbing/shooting, stealing, arson, rape, abductions, mob riots, etc.

During the open forum, I praised the presentation of Hideki, his emphasis on personal preference and individual choice. I said that many doctors and NGOs supported the horrible lockdown of 2020-2021 where the Philippines suffered a deep GDP contraction of -9.5 percent in 2020, the deepest and worst in Asia and the worst in Philippine economic history since post-World War 2. The same leading doctors of lockdown dictatorship are also into smoking-vaping prohibition campaigns, or raising the tax on tobacco and vapes to the sky. Meaning killing personal preference.

I also mentioned that in Philippines sin tax record, as the tax rate of tobacco went up, government revenues declined mainly because of the shift to smuggled and illegal tobacco products that are sold very cheap and pay zero tax, the Laffer Curve phenomenon.

Other panel discussions focused on addiction – internet and gambling addiction, drugs and sex addiction, overdose of over-the-counter (OTC) legal drugs and medicines, treatment methodologies, psychiatric interventions, community integration to deal with various addiction.

In the current tax hike proposals in Congress by the DOF – on sugar, alcohol, vapes (harm reduction to traditional tobacco), plastic, luxury vehicles, etc. – the policy approach should be finding an optimal tax rate that will give maximum revenues to the government and keep smuggling, illicit trade and tax evasion to the minimum. Not finding a maximum tax rate that will do the opposite, lower government revenues and higher smuggling incidence.