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SIN TAX LAW

By sassyxor Sep 28, 2013 1201 Words

RATIONALE FOR STATE INTERVENTION AND PUBLIC POLICIES
“Tobacco is the only industry that produces products to make huge profits and at the same time damage the health and kill their consumers.” - Margaret Chan, n.d.

The controversial Sin Tax Bill was approved and became a law when the Philippine President, Benigno S. Aquino III signed the Republic Act No. 10351 on December 19, 2012 after the long sixteen (16) years hot debate in the Legislative branch of the Philippines. This issue has been discussed and battled by the Pro and Anti Abaya’s Bill as they have to consider the people who will be affected and hurt by higher taxes behind the proposed bill. The loudest howl during the entire hearing were from the people comes from tobacco industry which has an estimated number of 2,000,000 people including the 500,000 tobacco farmers and their families whom getting their bread and butter from tobacco products. Similar to other approved laws, there were also group of people whom opposed from this proposal as it might kill the tobacco industries, loses jobs not only the tobacco farmers but also among them are the “takatak” boys whose selling cigarette sticks along the road, the small-time “sari-sari stores” and other business entity. What is Sin Tax?

Sin Tax is a kind of sumptuary tax and a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These types of taxes are levied by governments to discourage individuals from partaking in such activities without making the products illegal. It is so called “six taxes” because they are levied on commodities such as tobacco and alcohol which are considered sinful or harmful. As we all know, all kinds of smoking (e.g. cigars, pipes, hookah' or shi-sha) are all has the same harmful effects in human’s health as it contains the following chemicals:

According to the Morbidity and Mortality report of the National Cancer Institute (as of November 9, 2012 statistics) tobacco is the leading cause of preventable illness and death in the United States. It causes many different cancers as well as chronic lung disease and heart disease. The estimated number of deaths each year is 443,000 including approximately 49,000 deaths from the secondhand smoke. Regardless of public awareness that the main cause of cigarette smoking can cause lung cancer which is the leading cause of cancer deaths and causes many other types of cancer, people are continuously buying it as it contains addictive nicotine ingredients. The World Health Organization (WHO) also estimated that tobacco consumptions kills 10 Filipinos every hour due to major illnesses related to cigarette consumptions. Prior to the implementation of the Sin Tax Reform Law, a study by two economists (Sta. Ana & Latuja, 2011) estimates that there were at least 870,000 smokers will quit and 310,000 lives can be saved if sin taxes were levied, which will significantly increased the price of cigarettes. The Philippines has the 2nd cheapest retail price in cigarettes and the number one smoking country in Southeast Asia. The main problem of the Philippine government is the increasing numbers of young children using tobacco (1 in every 3 young Filipinos) and Filipino smoker consumes 1,073 sticks per year which resulted of 89,000 tobacco related deaths each year. The Global Adult Tobacco Survey (GATS) has estimated that more than 17 million adult Filipinos are smoking while a DOH survey showed that Filipino children as young as five years old are already starting to smoke. Cigarettes is considered harmful as it contains arsenic, formaldehyde, lead, hydrogen cyanide, nitrogen oxide, carbon monoxide, ammonia and other 43 unknown carcinogens while alcohol is a drinkable form of ethanol or ethyl alcohol which is powerful and addictive that goes directly to the blood stream and effects every system in the body. I watched the interview of Ms. Che-che Lazaro with Dra. Maricar Lempin, one of the most active leaders of the anti-smoking campaign in the country, she stated that according to the National Tobacco Association (NTA), there is only one good thing you can say about tobacco, it is the effectiveness of it to use as a pesticides. This only proves that tobacco can kill she cited. Scientists also claim that the average smoker will lose 14 years of their life due to smoking and many of lives are already wasted (young and adults) due to bad habit of using the sinful products which are unfortunately the cheaper tax imposed for Filipinos.

Republic Act of the Philippines No. 10351
“An act restructuring the excise tax on Alcohol and Tobacco products by amending section 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424. Otherwise known as the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334 and for other purposes”. As stated, Sin Tax Reform Law is now currently implemented in the Philippine government setting, under review process after every two years from the date of implementation. The estimated government additional revenue for the first year of implementation is around P33.96 billion of which P23.4 billion is from cigarettes, P6.06 billion from distilled spirits and P4.5 billion from fermented liquors. There will be a gradual shift to a unitary taxation in order to simplify the current multi-tiered structure and to prevent the excise taxes to be eroded by inflation, the excise tax rates will be increased by 4% every year effective 2016 for distilled spirits and 2018 for cigarettes and beer.

Major Views of the Stakeholder
Proponents argue that the behavior associated with the consumption of tobacco and alcohol are immoral or “sinful” hence the label “six tax” and by making the cost of unhealthy behavior prohibitive, the stakeholder hope to produce a healthier society. The duties on these products are a potential revenue source that will help fund the Universal Health Care Program, likewise to improve the health care facilities of the local and major hospital nationwide. It intends the following health measures: (1) Reduce and discourage the tobacco consumption among its citizens, especially the youths from smoking and drinking alcohol and spend their money instead to their real necessities. (2) To avoid illnesses caused by the use of the tobacco and alcohol. The legislator intended to increase the price of the sin products; therefore it would not be affordable for its users. Pres. Benigno Aquino III assured the sector, particularly the tobacco farmers who would be affected by the law that 15% of the incremental revenue collected will go to them and 85% will go towards to the Universal Health Care under the National Health Insurance Program.

“Sin Tax is not a battle for revenues; this is a battle for the health of the people” Solita Collas – Monsod, n.d.

References

Aquino signs Sin Tax Reform Law http://bit.ly/VWnVwK

Definition of Sin Tax Law http://www.investopedia.com/terms/s/sin_tax.asp

Margaret Chan. (n.d.). BrainyQuote.com. Retrieved August 28, 2013, from BrainyQuote.com http://bit.ly/1eDsU01

NCI Fact Sheet: Second-hand Smoke and Cancer
http://www.cancer.gov/cancertopics/factsheet/Tobacco/ETS

NTA Livelihood and Free Education Project http://nta.da.gov.ph/programs_scholar.html

Republic Act No. 10351 – Sin Tax Reform Law http://bit.ly/TqWoDr

Smoking Cessation http://quitsmoking.about.com/

Smoking Kills 10 Filipinos Every Hour http://bit.ly/19HbKen

Tobacco Facts http://www.cancer.gov/cancertopics/tobacco/statisticssnapshot

Water Pipe Tobacco Smoking http://www.jnrbm.com/content/5/1/17

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