Higher tobacco taxes save lives, but industry still profits

Manila, 29 November 2018: The Southeast Asia Tobacco Control Alliance (SEATCA) challenged the truthfulness of statements of tobacco companies and pro-tobacco politicians opposing further tobacco tax increases. Previous tobacco tax increases have helped reduce tobacco use and provided financing for Philhealth and health services, but the tobacco industry continues to make substantial profits.

“It is absurd to claim that the tobacco industry is dying, when the reality is 17 Filipinos die every hour from smoking,” said Dr. Ulysses Dorotheo, Executive Director of SEATCA. “In fact, in its annual report Philip Morris International (PMI) reported sales of more than 50 billion sticks in the Philippines in 2017, and it reported `further profit growth’ in the Philippines in its 2018 first quarter earnings report.[1] Similarly, Japan Tobacco International (JTI) wouldn’t spend US$1 billion to acquire Mighty Corporation and its debts if JTI didn’t expect to profit. The tobacco business in the Philippines is prospering,” he added.

According to Euromonitor, an estimated 94 billion sticks, worth about PhP 262.5 billion, were sold in 2018, and  cigarette sales are projected to increase to 98 billion sticks, worth PhP 288.8 billion, in 2020.

“Tobacco tax increases are a win-win policy even for tobacco farmers. History has junked the false claim that another round of tobacco taxes will kill the tobacco industry and the livelihood of millions of Filipinos. In 2012, the tobacco industry made similar claims against the tax reforms in R.A. 10351,” said Dr. Dorotheo in response to statements of Ilocos Norte Governor Imee Marcos.

In 2016, PHP 69.4 billion or 15 percent of the incremental sin tax revenues under R.A. 10351 were earmarked to help tobacco farmers and workers find alternative livelihoods.  “This is in addition to the billions of pesos already earmarked each year for tobacco-growing provinces under R.A. 7171,” added Dorotheo, asking “If our tobacco farmers are well-protected under the Sin Tax Reform Law, are government officials in the Ilocos congressional districts spending those billions of pesos to benefit our tobacco farmers?” 

Reacting to the PHP 2.50 per pack tax increase approved on second reading yesterday by the House of Representatives, Dr. Dorotheo said, “This meager increase will sabotage our health gains. According to Dr. Antonio Dans, an academician of the National Academy of Science and Technology and professor at the U.P. College of Medicine, this small increase will result in 200,000 more smokers each year. While tobacco companies will continue to profit, more Filipinos will be at high risk of tobacco-caused diseases, disabilities, and early death, and the government and the Filipino people will have to bear the huge economic costs of such tobacco-caused diseases.”

“To reduce tobacco use, improve public health, and ensure funding for the Universal Health Care (UHC) Bill approved by the Bicameral Conference Committee of the Senate and the House of Representatives yesterday, cigarette tax rates should be increased immediately to Php 90 per pack followed by an annual increase of ten percent,” asserted Dorotheo. The Department of Finance and Department of Health estimate that this would generate an additional 45 billion pesos annually to help fund UHC and lead to one million fewer smokers by 2022.

The Philippines’ 2012 Sin Tax Reform Law is often cited internationally as a shining example of best practice. While generating much needed tax revenues, with a major part being earmarked for universal health insurance of poor families, it also helped a million smokers quit. According to the Philippine Global Adult Tobacco Survey, there were 16 million adult tobacco smokers in 2015 compared to 17.3 million in 2009.

 

Contact:
Wendell C Balderas, Media and Communications Manager – SEATCA
Email: wendell@seatca.org | Mobile: +63 999 881 2117 #

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About SEATCA
SEATCA is a multi-sectoral non-governmental alliance promoting health and saving lives by assisting ASEAN countries to accelerate and effectively implement the evidence-based tobacco control measures contained in the WHO FCTC. Acknowledged by governments, academic institutions, and civil society for its advancement of tobacco control movements in Southeast Asia, the WHO bestowed on SEATCA the World No Tobacco Day Award in 2004 and the WHO Director-General’s Special Recognition Award in 2014.

[1] Slide 18, PMI 2018 First-Quarter Results, April 19, 2018