HealthJustice Philippines, a public health policy think tank that won the Bloomberg Award for Global Tobacco Control in 2012, announced that the two-tier tobacco tax system, which assigns lower tax rates to cheaper cigarettes or those that are “lower-tier”, will not be effective at curbing smoking rates.
HealthJustice recommended instead a single-tier system, which imposes uniform tax rates on all tobacco products regardless of their prices.
“The two-tier tobacco tax system that the tobacco industry has been pushing for is ineffective and will not encourage smokers to quit or reduce consumption of tobacco products,” said Atty. Bianca Bacani of HealthJustice.
A sin tax briefer produced by the government illustrates the shift from a multi-tier to a single-tier tax system in the following way: “For cigarettes, a two-rate structure of P14 and P30 per pack for the 1st two years, and a uniform rate of P30 per pack of cigarettes on the third year.”
Stella Luz Quimbo of the University of the Philippines College of Economics pointed out during the 37th Annual Scientific Meeting of the National Academy of Science and Technology (NAST) in 2015 that the sin tax reform law paved the way for the emergence of cheaper cigarettes from tobacco manufacturers as a response to downshifting, which takes place when smokers shift to cheaper cigarette brands because of the increase in cigarette prices, calling it the “Mighty effect.”
“If we don’t make tobacco products substantially more expensive, smokers will continue to shift to cheaper cigarettes instead of shift to a healthy lifestyle. They will sustain their habit and keep smoking. They won’t even reduce the number of cigarettes they consume. This is called downshifting, and it has taken place in many countries after they imposed the two-tier tax tobacco tax,” Bacani warned.
As early as 2012, the Department of Finance also reported that downshifting in alcohol and tobacco products caused the government to lose P32 billion in revenues.
“Cigarette manufacturers have been rolling out cheaper cigarettes because they know that insignificant price increases will not make the smokers quit; these will only make them turn to cheaper products. 240 die every day due to smoking-related diseases. Let us not allow the tobacco industry to endanger more lives,” Bacani added.