'Higher sin taxes won't address health concerns'

MANILA, Philippines – Senate President Juan Ponce Enrile expressed belief yesterday that the steep increase in excise taxes for alcohol and cigarettes would not address health concerns, which is being used by some sectors to support the tax reform bills now pending in the Senate.

Enrile said in a radio interview that the ill effects of such products is an accepted fact, but whether the tax is 100 or 200 percent, you cannot stop the habit. Cigarette sales may be affected, but the demand is still there, and it will be met by smuggling.

Enrile has been vocal against imposing too high excise taxes on cigarettes and alcohol but he is amenable for both Congress and stakeholders to reach an agreement for the proper tax reform bills.

“The government’s problem is the increase in smuggling. We have the longest coastline in the world,” the senator said.

Enrile said he has been involved with tax issues as a professional and public servant, and he believes what they’re saying about increased revenues will not happen.

He added that if the number of smokers decreases, logically, the government’s take will also contract.

With Congress busy tackling the budget and the debates on the Reproductive Health bill, Enrile said he is leaving it up to the Senate Majority Leader Vicente Sotto III and Senate ways and means committee chairman Ralph Recto to set the hearings for the pending measures.

Storeowners air concern

Enrile made known his stand as various groups, including an association of supermarket owners and operators, also expressed concern over the economic impact of increasing taxes on the two products.

Steven Cua, president of the Amalgamated Supermarkets Association Inc. (PAGASA), said that the move would diminish the purchasing power of the poor and fixed-wage earners. 

“On the downstream, we understand that there are at least 900,000 sari-sari stores which carry and sell cigarette products. Based on our evaluation, a significant portion of sari-sari store revenues is derived from the sale of said products,” Cua said, explaining that increasing tax on cigarettes will affect the income of retailers.

Cua said a disturbing multiplier effect of high cigarette price on production costs is that it will also affect the wholesale and retail industries.

“While we understand that there are certain health and medical risks associated with alcohol intake and cigarette use, in the final analysis, it is still a matter of choice for customers whether they subscribe to these products or not,” Cua said in a position paper submitted to the Senate.

Cua said the tax measure approved by the House would force manufacturers of low-grade cigarettes to price their products way beyond the reach of low-income consumers.

Along with the appeal for the Senate to take into consideration the interest of small grocery and sari-sari store owners, Cua said the group also shared the view of Enrile that the House version will only encourage smokers to patronize smuggled cigarettes.

“PAGASA believes that a more reasonable and moderate tax increase in phases/stages would do well in achieving the two-pronged objective of making cigarettes an expensive habit for new and existing users and in collecting more taxes,” the group said.