No need to amend

A government exists for the promotion of the common good and not for the promotion of some special interests or welfare of specific business or social groups. This is especially true with regards to the two branches of government of a democratic country like ours—the Legislative Department which enact the laws and the Executive Department which implements them. Congress should design laws and the Executive branch should implement and enforce them solely for the benefit of the people at large. The public purpose in the enactment and implementation of any law should never be sacrificed for private interests. On the contrary private interests and benefits must always yield to the public welfare.

A typical example of this kind of law is RA 10351 or the Sin Tax Reform Act enacted only last 2012 imposing higher taxes on cigarettes and alcoholic drinks. Undoubtedly this is one of the better laws coming out of the legislative mill operating under the current BS Aquino III regime. It may even be considered as a “feather in the cap” of Aquino as he is known to be an inveterate smoker. It would really appear here that he is promoting the common good over and above his own personal inclinations although, even with higher taxes, he can still afford to smoke the best brand.

The law indeed promotes the common good because it has contributed to the improvement of the health of our people. It makes the bad habit of smoking and drinking more expensive and therefore, more prohibitive due to higher taxes on cigarettes and alcohol. Such higher taxes have obviously reduced smoking and drinking among our people since a lot of them, especially the poor, could no longer afford to buy cigarettes and alcoholic drinks which are dangerous to their health.

Specifically, the law will accomplish what the anti-smoking lobbyists wanted, that less and less people smoke when prices of cigarettes go up.  Based on the law’s intent of raising cigarette taxes, the price of cigarettes by 2017 will be a uniform P30 per pack regardless of brand or quality, while in the fifth year of its enforcement the price of the cheapest brand will at least be P40 a pack. By then, the Philippines shall have joined the rest of the world in making cigarettes a luxury product. And hopefully, the number of smokers who may get sick from smoking shall have been cut down to those who can afford their smoking vice. So in due time statistics will show the overall beneficial effects of this law on the people’s health especially on the reduction of deaths through lung cancer and tuberculosis which are mainly caused by smoking.

Secondly, with higher taxes on cigarettes and alcoholic drinks, government revenues are sure to increase thus generating more funds necessary in running the affairs of government particularly in funding social services, more schoolrooms, better hospital facilities and other programs of the government for the common good.

Based on the records of the Bureau of Internal Revenue (BIR), collections as a result of the new law almost doubled from January to November last year from P60.4 billion to P91.6 billion. No revenue measure has accomplished that much, not even previous amendments to said law. The “Sin Tax” law has obviously succeeded in this regard. 

But as often happened in the past, revenue measures, and even other laws with the best of intentions, sometimes have unintended consequences. The unintended consequence of the new sin tax law was the shift of brand by smokers from the expensive, branded, cigarettes to more affordable brands that suit their tastes. In other words, under this law even the smoking habits of our countrymen have been “Filipinized”. The lawmakers should thus still welcome such unintended consequence because of the law’s favorable resultant effects on the Philippine economy even if it favors a Filipino company pitted against a foreign company with global reach.

Unfortunately however some lawmakers are again clamoring for the amendment of this law despite its unprecedented success on its maiden year. Apparently, the authors of the law thought it would kill the marginal players that make cheap cigarettes like the Mighty Corporation, which is the only Filipino cigarette manufacturing company now in viable operation. In fact this company has suddenly become a major player to reckon with in the local tobacco industry. BIR records show that it has paid a handsome P8.2 billion excise tax in 2013 alone, or an unprecedented 1,600 percent increase in the government coffers from its P531 million excise tax paid in 2012.

So before these bright boys in Congress start tinkering with it the law, they should first consider its overall resultant effects in our economy and the Filipino entrepreneurs. They should not succumb to the pressures of foreign lobbyists out to promote their own agenda like what happened before with regards to another law passed during this regime when the President even used the pork barrel in convincing Congress to pass it.

The sin tax law has no major defect and needs no amending. Even its enforcement, as far as the sales of cigarettes are concerned, is not a problem. There are only three factories to monitor, one in Marikina, another in Batangas and a third in Malolos, Bulacan. With CCTV cameras already in common use, actual BIR examiners assigned to monitor how many packs of cigarettes get out of those factories a day, may no longer be needed. As the Americans love to say, “if it ain’t broke, why fix it?”

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