House asked to look at figures in sin tax reform bill

MANILA, Philippines - Anti-tobacco advocates yesterday asked the House Committee on Ways and Means to look at the figures to see the “weakened impact” of the legislation on public health with the approved version of the sin tax reform bill or House Bill 5727.

In a statement, they said House Justice Committee chairman Davao Rep. Isidro Ungab should look into the impact of the amended bill on revenues and cigarette prices to see that the expected gains will not be met.

“Sure, some people will not buy cigarettes anymore when the price goes up, but this effect will be short-term and unsustainable,” said Health Justice research economist Ruben Carlo Asuncion.

The original HB 5257 would have changed the cigarette excise tax structure from a four-tiered system to a single-tiered one. It would have also required taxes to reflect yearly changes in the price of goods.

But the amended version provides for two tiers for cigarettes and three tiers for alcohol, and increases tax rates by 8 percent every two years.

Asuncion claimed that because of the freeze, cigarettes sold in the Philippines would still be less than P100 in 10 years, “still much lower than the prices today in our neighboring countries.”

At present, the average retail price of cigarettes per pack in Thailand is P105, P109 in Malaysia, and P263 in Singapore.

“The numbers speak for themselves. Having two tiers instead of one is problematic. There will be a 36 percent price gap between tiers. The obvious consequence will be smokers shifting to a cheaper brand and tobacco companies scrambling to reclassify their brands under the lower tier. When that happens, both health and revenue will lose,” he added.

Ramon Paterno of the Universal Health Care (UHC) Study of the National Institute of Health-Group, Institute of Health Policy and Development Study said the bill has minimal impact on revenues.

From the expected P60-billion revenues from the original HB 5727, tax collection will only reach P33 billion.

“With the much needed reforms in health human resource, health services, improvement in health facilities and the high cost of medicine, P33-billion projected revenues will be too small. We need at least P312 billion per year to implement UHC,” Paterno maintained.