HealthJustice Philippines, a public health policy think tank and advocacy group aiming to “bridge the gap between health and law”, pushed for further increases in tobacco tax following the release of the 2016 World Bank report recognizing the positive impact of the Sin Tax Reform Law passed in 2012.
“The reform not only greatly increased, simplified and improved the excise tax reform, but also earmarked the significant part of the large ensuring incremental revenues to helping finance Universal Health Care (UHC) for the bottom forty percent of the population,” stated the report entitled *Sin Tax Reform in the Philippines: Transforming Public Finance, Health, and Governance for More Inclusive Development.*
“This is a strong affirmation of the effectivity of the tobacco tax as a health measure in the Philippines. The best way forward is to further increase it. Philippine tobacco tax remains low and there is space to further increase the rates in order to lower tobacco consumption,” said Atty. Irene Reyes, Managing Director of HealthJustice.
Reyes cited a HealthJustice study entitled *Cigarette Prices and the Sin Tax Law: The Impact of Sin Tax Law on the Affordability of Cigarettes in the Philippines,* which revealed that even with mandated increases in cigarette taxes, prices of cigarettes are still lower in the Philippines compared to Thailand, Singapore, Malaysia, and Vietnam, and that cigarette prices in the Philippines will remain affordable if inflation and economic growth (as measured by GDP) are taken into account.
“The annual increase in the price of cigarettes to keep them less affordable should be at 11 percent, way higher than the four percent stipulated in the Sin Tax Law,” Reyes stated.
Finance Undersecretary Karl Kendrick Chua announced last month that the Department of Finance (DoF) was preparing a “healthy tax package” recommending an increase in the tobacco tax, which he described as currently “one of the lowest in the world.”
RA 10351 or the Sin Tax Reform Law of 2012 restructured the excise tax on tobacco and alcohol products, amending RA 8424 or the National Internal Revenue Code, as amended by RA 9344. The law allocated part of the revenue from sin taxes for universal health care under the National Health Insurance Program, the attainment of the millennium development goals, and health awareness programs, medical assistance, and health enhancement facilities program.
The World Bank report characterized the Philippine experience as a potential model for nations implementing or about to implement a similar law. “[It] should prove encouraging and useful for reform champions in other countries advancing similar types of excise tax and development financing/expenditure earmarking for equitable development and public health,” concluded the abstract of the report authored by Kai Kaiser, Caryn Bredenkamp and Roberto Iglesias.