Two-Tier Tobacco Tax Ineffective, Will not Make Smokers Quit

HealthJustice Philippines said Monday the two-tier tobacco tax system, which imposes lower tax rates on cheaper cigarettes or those that are “lower-tier”, will not be effective in curbing smoking rates in the country.

“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.

Instead, the group recommended a single-tier system that assigns uniform tax rates to all tobacco products, regardless of their prices.

Illustrating the shift from a multi-tier to a single-tier tax system, a sin tax briefer produced by the government notes the imposition of “a two-rate structure of PHP14 and PHP30 per pack for the first two years, and a uniform rate of PHP30 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 has paved the way for the emergence of cheaper cigarettes from tobacco manufacturers.

Quimbo said producing cheaper cigarette brands has been the 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 shifting to a healthy lifestyle,” Bacani warned.

“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 tobacco tax,” she explained.

She also said that cigarette manufacturers have been rolling out cheaper cigarettes because they know that insignificant price increases will not make the smokers quit but just turn to cheaper products.

As early as 2012, the Department of Finance also reported that downshifting in alcohol and tobacco products had caused the government to lose PHP32 billion in revenues.

“Two-hundred-forty people die every day due to smoking-related diseases. Let us not allow the tobacco industry to endanger more lives,” Bacani added.

Health Justice Philippines is a public health policy think tank that won the Bloomberg Award for Global Tobacco Control in 2012. (PNA)CVL/LSJ/EBP