Higher cigarette tax will help 3.2M Filipinos quit smoking – DOF

by Ben O. de Vera, Philippine Daily Inquirer, Feb 25, 2019

Further jacking up the excise tax on cigarettes to P60 a pack, as proposed under a pending bill sponsored by Sen. Manny Pacquiao, will help 3.2 million Filipinos quit smoking, cutting cigarette consumption nationwide by 17 percent, the Department of Finance (DOF) said.

In a statement issued on Monday, the DOF said Senate Bill No. 1599 also reflects its joint proposal with the Department of Health (DOH) to slap an additional 9 percent on the tobacco excise tax yearly following the initial increase.

At present, the unitary cigarette excise tax stood at P35 per pack, following the scheduled hike in July 2018 under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The DOF quoted Finance Undersecretary Karl Kendrick T. Chua was quoted as saying that joint simulations of the DOF, the DOH, and the World Health Organization (WHO) showed that “the threshold in which the cigarette consumption would prove elastic is to tax it above P73 per pack,” such that incremental revenues from so-called sin taxes could decline at such a high excise rate.

Because of this, Pacquiao’s proposal at P60 a pack was expected to be “beneficial because it would prompt the youth, the poor and other price-sensitive cigarette users to stop smoking,” Chua said.

The DOF also quoted Health Secretary Francisco Duque III as saying that the Pacquiao bill would prevent some 713,000 deaths and would prompt 3.2 million adults to quit smoking, citing the joint DOH-DOF-WHO simulations.

The proposed higher excise tax on tobacco products formed part of the Duterte administration’s pending tax reform Package 2 Plus, which also included increases in alcohol excise taxes and slapping a levy on all mining operations.

Package 2 Plus was estimated to result in an additional P60 billion in revenues during its first year of implementation, which would be a source of funding for the Universal Health Care Law signed by President Rodrigo Duterte this month. /atm