Sin Tax Research Paper

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SIN TAX (HOUSE BILL 5727) SHOULD BE LAGALIZED IN THE REPUBLIC OF PHILIPPINES (+)

In partial fulfillment of the requirements
Of the subject PHIN11A
Submitted by:
Ceejay Martinez
Abby Padua
Merene, Myka Kim
Villareal, Peter James
On
October 3, 2012
To:
Ms. Violeta Tabin

PREMISES

1. Smoking cigars and drinking liquors are bad to health. 2. Number of accidents will be lessen.
3. Lessen the number of users.
4. It may cause air pollution.
5. It may stop the production of cigars and liquors.

I. Introduction

Sin tax is a tax levied on a certain goods and services that are seen vices, such as alcohol, tobacco and the like. Sin tax is used for taxing activities that are considered undesirable. These types of taxes are levied by the government to discourage individuals from partaking in such activities without making the use of the products illegal. Like other taxes, sin tax also provides a source of government revenue.

Since the Senate wants to pass or reform the Sin Tax Bill for some reasons like discouraging youth or people from smoking and alcohol drinking, for health purposes and the like, it has been an issue. According to Snowdan (2012), taxes on tobacco and alcoholic beverages are doubly regressive because they are disproportionally consumed by people on lower incomes, or the poor. According also to some research, a heavy smoker or an alcoholic is unlikely to lessen consumption because of an increase in price; making sin taxes an unreliable way of reducing consumption or improving public health. Thinking on taxing vices, sin taxes will really be an effective way to convince people from drinking alcoholic beverages. Thus, an increase in tobacco prices has a little or a small effect on using these vices because it is inelastic. The objective of this paper is to know if sin tax levied on tobacco really discourage the mass, especially the poor, from smoking

A. Historical Background

1. Foreign History

Antismoking advocates tout this month's record increase in the federal cigarette-tax rate, which on April 1 spiked from 39¢ to $1.01 per pack, as a move that will bolster the federal budget while saving an estimated 900,000 lives. Supporters say the measure will stop 2 million kids from lighting up and spur about 1 million adults to quit, but the sharp hike has some smokers fuming. Cigarette taxes, detractors argue, are a way for governments to line their coffers by legislating personal choice--and a prime example of a regressive "sin tax," the term often used for fees tacked on to popular vices like drinking, gambling and smoking.

The sin tax is an established tactic. In the early 1500s, Pope Leo X underwrote his lavish lifestyle in part by taxing licensed prostitutes, and Peter the Great preyed on Russian vanity two centuries later by charging men who grew beards. In the Federalist papers, American patriot Alexander Hamilton proposed an excise tax on alcohol to boost revenues and curb consumption. The measure, enacted in 1791, sparked the Whiskey Rebellion, in which federal authorities were forced to quash an uprising by livid Pennsylvania settlers.

The U.S. has taxed cigarettes since the Civil War, although its levies often lag behind those assessed by other nations. This month's increase--signed by a President who's trying to kick the habit himself--comes as recession-battered states are considering charges on everything from pornography to marijuana as a way to pad their budgets. Tobacco taxation enjoys broad public support, but other recent efforts to impose sin taxes have sputtered. Proof, perhaps, that in trying times, doing bad can feel really good.

2. Local History

Barely four months after she became President of the Philippines, Corazon C. Aquino issued Executive Order No. 22 on 25 June 1986. This order increased the taxes on cigars and cigarettes and all alcoholic drinks to approximate world level taxation on these items where the tax...
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