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Is sin tax reform working?

Half the job has been delivered. With the national government acknowledging markedly higher tax collections during the first four months of the year from the twin sin products of tobacco and alcohol, the cigarette manufacturing industry will now have to face the other side of a new battle, i.e., a heightened health campaign to cut down on consumption.

The Bureau of Internal Revenue recently reported a 25-percent hike in excise tax payments by manufacturers of cigarettes and liquor. Two thirds has been contributed by the tobacco industry alone.

Consumption reduction not achieved

The other side of the equation, which has not yet been met, is the need to dampen sin products demand. The increase in taxes, and subsequently, retail tags has not translated to lower consumption. Worse, there has been a noted downgrading of cigarette usage from the higher-priced brands to the less expensive ones.

For government, there is a need to bring down consumption of sin products to reduce the cost of public health care especially from the costly illnesses related to alcohol and tobacco use that have largely affected the population segment that relies heavily on state-funded medical institutions.

While international agencies like the World Health Organization are insistent that higher taxes on cigarettes, for example, saves lives, the Philippines has still to see this happen given the recent steady consumption trends.

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Higher excise taxes

As of the first of January this year, higher excise taxes on tobacco and alcohol products were made effective as per Republic Act No. 1035 or the Sin Tax Reform Law signed by P-Noy last Dec. 20.

For the more popular high-priced brands in the market, the excise tax was more than doubled. But for low-priced cigarettes, which were largely the target of the sin tax restructuring, excise taxes went up by more than five-fold.

While the sin tax law has been informally twin-billed as a health act, there are no specific provisions in the law that will directly affect the rising consumption rates of sin products especially alarming among the youth sector.

Global health advocates, particularly those focused on reducing tobacco use, have been recommending a slew of remedies that include bans on advertising, repackaging of packs and labels to include huge warnings, and bans on public smoking.

Landmark

The Philippines, partly because it is a signatory to the WHO Framework Convention on Tobacco Control, has been consistently implementing recommended measures. The recent passage of the sin tax law is deemed as a landmark milestone in this nation’s fight for health.

The Sin Tax Reform Law was pushed by P-Noy to raise revenues for the promised universal health program. The new legislation was also aimed at eliminating the monopoly position enjoyed by the Philip Morris and Lucio Tan’s Fortune Tobacco.

For over 17 years the country’s biggest tobacco companies, led by the combined forces of Philip Morris and Lucio Tan’s Fortune Tobacco, managed an effective lobby to maintain a tax structure that kept excise taxes at exorbitantly low levels, and subsequently contributed to having Philippine-made cigarettes sold at one of the cheapest prices in the world.

Other measures needed

The new law is structured in such a way that uniform (and higher) taxes will be imposed on all cigarette brands by 2016. Hopefully, by this time, the desired dampening of cigarette use will really be achieved.

Retail cigarette prices in other countries are not only far higher than ours, the cigarettes are also not readily accessible to consumers. In contrast, an elementary adolescent student in the Philippines from an urban poor community can easily buy a stick of cigarette.

Other recommended measures that could be still implemented to help in the campaign include a more comprehensive compliance to a total ban on smoking in public places, more graphic warnings that make use of pictures, and pro-active campaigns to help users to quit smoking.

Warning on e-cigarettes

In a related development, more smokers who want to quit the habit are being attracted to e-cigarettes that manufacturers claim has been successful in helping those who aspire to wean themselves from nicotine hunger or addiction.

Users of these electronic cigarettes can opt to load up with liquids that contain nicotine or simply placebos. Because there are cigarette users that are simply content with the act of inhaling, for the sake of looking fashionable so to speak, e-cigarettes sans the nicotine are an ideal solution.

Available in most malls, e-cigarettes are electronic devices that allow a user to inhale vapor from a gadget that looks deceptively like a cigarette. Aside from allowing the user to feel as if he or she is really smoking a cigarette, nicotine content in the vapor can be controlled and eventually totally removed.

Some users swear that they have been able to kick the habit, but WHO had recently released a warning that claims of e-cigarette vendors have not been validated by its organized panel of review experts who were tasked to study the gadget.

Such e-cigarette manufacturers also claim that the gadget eliminates second-hand smoke that is believed to cause more health challenges to non-smokers. Not necessarily, said the Food and Drug Administration; it warned that vapor emissions were not necessarily risk free.

The liquid that is processed by the e-cigarette mechanism apparently contains propylene glycol and other so-deemed carcinogenic metals such as nickel and chromium. Inhaling these substances, according to the FDA, could be hazardous to one’s health.

Since e-cigarettes are an invention that had been marketed fairly recently, the FDA and WHO must be able to recommend more concrete measures that will help consumers to make an intelligent decision. Releasing warnings via media is not enough.

If left unchecked for too long, e-cigarettes may do more harm to users in the long run. Already, WHO says that their studies have shown how some gadget users who were not habitual cigarette users ended up getting back to the real thing after putting aside their electronic inhaler.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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