Hike tobacco excise tax – WHO

MANILA, Philippines — The government should consider increasing excise taxes on tobacco products to at least 75 percent of the average retail price to generate additional revenue for COVID-19 measures.

Jeremias Paul Jr., a former undersecretary at the Department of Finance who now leads the World Health Organization (WHO)’s fiscal policy unit, said raising tobacco taxes would also help stifle demand and, eventually, minimize COVID infections with severe symptoms.

“With this limited fiscal space, one potential option I really urge countries to do is raise tobacco and other health taxes. Raising excise taxes on tobacco products is a proven effective and cost-effective measure to prevent NCDs (non-communicable diseases),” he said.

According to Paul, the government should also consider factors such as affordability trend and tax structure in determining how much tobacco taxes should be imposed.

At the end of the day, he said the excise tax should result in price hikes that will force buyers to rethink consumption.

In May, the WHO warned that smokers face 1.5 times the risk of acquiring COVID with severe symptoms than non-smokers.

Paul said the government should include the increase in tobacco taxes as part of its pandemic response, framing it as one of the programs to mitigate future burden on the health system and its workers.

Signed by President Duterte in 2019, Republic Act 11346 placed an excise tax of P45 per pack on cigarettes, rising to P50 this year, P55 in 2022, P60 in 2023 and five percent in 2024 onward.

Last year, revenue agencies collected P148.45 billion in tobacco taxes, exceeding their target of P139.12 billion by nearly seven percent. In 2021, collection has grown by more than 31 percent to P82.97 billion as of end-July, from P63.3 billion a year ago.

Economic managers, for their part, scramble to find additional resources in financing programs and projects to alleviate the pandemic’s impact on the economy. For the year, the fiscal deficit is seen to reach P1.85 trillion, or 9.3 percent of gross domestic product.