29 September 2011
From HealthJustice Philippines
Young smokers gave the price of 5 pesos per stick, UP students clarify
Responding to recent reports attributing to HealthJustice Philippines the proposal to increase cigarette price to 5 pesos per stick so young people will quit smoking, the University of the Philippines Communication Research Society (UP-CommResSoc), the student organization that conducted the survey, clarified that young respondents were the ones who indicated 5 pesos per stick as the price that will make them stop buying cigarettes.
“We asked them, ‘Magkano ang halaga ng sigarilyo per stick na magpapatigil sa iyo sa pagbili ng sigarilyo? (How much is the cigarette price per stick that will make you stop buying cigarettes?), and a majority of them said 5 pesos or higher,” explains UP-CRS spokesperson Princess Ubongen, a fourth year student at the UP College of Mass Communication, speaking in behalf of the 45 UP students who conducted the survey.
“We have been trained in getting the trust of respondents whenever we have to conduct research on a sensitive topic,” Ubongen says. “Most of the respondents felt comfortable towards the topic and willingly referred us to their friends who also smoke,” she adds.
Early this month, UP-CommResSoc conducted a quick survey for HealthJustice Philippines. The respondents were students who are currently smoking and located in the eight most populated public high schools in Quezon City. Survey results show that 71 percent of the 435 respondents will quit smoking if the price of a cigarette stick will cost 5 pesos or more. Almost 90 percent of the respondents buy the high-priced brands currently priced at P32 per pack. On consumption per month, 28 percent say they smoke 1 to 3 packs, 33.7 percent between 3 to 10 packs, and 20 percent, more than 10 packs. Almost half of the survey respondents were 15 to 16 years old, 25 percent were 13 to 14 years old and 23 percent were 17 to 18 years old.
UP CommResSoc conceptualized and conducted the research with the guidance of their adviser who is a professor in the field of Communication Research in UP.
Ubongen makes it clear that UP-CommResSoc does not have an official stand on the issue of tobacco taxes. Asked why they agreed to conduct the research, Ubongen says “The study is socially relevant”. This is in line with one of their organization’s values, which is social responsibility, and they believe they can contribute well in this endeavor.
“We tried to make the study as objective as possible by following standard protocols and procedures to ensure its objectivity,” Ubongen concludes.
Maria Carolina Bello
A new cigarette affordability study authored by Filomeno Sta. Ana III of Action for Economic Reforms and Jo-Ann Latuja of HealthJustice, shows that cigarettes remain extremely affordable.
According to the authors, the current cigarette excise tax system is the main reason that explains the affordability of cigarettes. They note two problems, namely the price classification freeze that pegged the price groups of majority of the cigarettes to their 1996 net retail prices (NRP) and the absence of indexing the taxes to inflation.
“The basis used for the taxes is almost two decades old. Tobacco should be taxed according to the current NRP,” said Sta. Ana. “Furthermore, the absence of automatic indexation to inflation erodes the real price of tobacco products, hence making them more affordable,” he added.
To complete the tobacco tax reforms, Sta. Ana stressed that the tobacco tax system be made simple by adopting a unitary tax for all cigarette brands, regardless of their prices. ”The current system is multi-tiered. This creates a huge price gap between the more expensive brands and the cheaper ones. The result — smokers of higher-priced brands just shift to the cheaper cigarettes,” he said.
Both authors said that they strongly recommend a tax reform that will have a unitary tax structure, and will peg taxes to current NRP by removing the price freeze and indexing the taxes on inflation or nominal GDP growth.
“Various studies have shown that an increase in cigarette prices effectively reduces smoking, especially among the youth,” said Latuja. “By enacting the right tobacco tax measures like increasing the tax, rate, indexing the tax to inflation, adopting a unitary tax, government, and removing the price classification freeze, the government will be able to protect our kids from yosi.” she said. ###
Finance Secretary Cesar Purisima may have gotten the nod of the Commission on Appointments, but will he get the nod of a nation in dire need of sin tax reforms? Will the newly confirmed secretary heed the advice of local and international financial institutions to increase the tobacco tax?
On Wednesday, Senate President Juan Ponce Enrile asked Sec. Purisima why there is a need to raise the cigarette tax. Sec. Purisima answered that there is no specific plan to raise taxes, but will focus on improving tax collection instead.
However, countless studies validate that the country has an urgent need to increase the tobacco tax. The World Bank is only one of the many institutions that assessed that the Philippines has one of the lowest cigarette tax burden in Southeast Asia and that our excise tax system is much more complicated compared with other countries.
But will efficient tax collection suffice?
“While efficient tax collection is a noble goal, it will not solve our burgeoning fiscal problems. Tobacco companies are contributing only about P30 billion in excise tax per year while the economic costs including expenses for health care and cost of productivity losses of only four of the many tobacco-related diseases range from P218 billion to P461 billion every year. You don’t have to be a genius to see where the problem lies,” said Jo-Ann Latuja, research associate at the UP School of Economics, and one of the authors of Taxing Health Risks, a policy paper on tobacco tax and health promotion.
The World Bank also noted in their studies that there is a need to adopt a uniform excise tax rate for cigarettes and to index the rates to nominal GDP or income growth to guarantee that both excise incidence and burden will not fall over time.
Tobacco industry taxes are way below expenditure on health, says DOH
In a press con last month, the Department of Health announced that the number of Filipinos dying every year due to smoking and even inhaling second hand smoke has ballooned up to 87,600. This translates to 240 deaths every day, or 10 every hour.
Acknowledging the heavy burden tobacco has brought into the country, Undersecretary Teodoro Herbosa echoed that the excise taxes collected from the tobacco industry are way below the cost and expenditure on health caused by tobacco-related diseases.
Local policy paper verifies urgent need for tax reform
Last year, a book entitled Taxing Health Risks, published by the UP College of Law and HealthJustice, explained how tobacco tax reforms can improve the country’s public health condition. The authors, Leonen, Sy, Latuja, and Reyes noted that for the government to meet its long-term health objectives, a tobacco tax reform should aim to simplify the existing taxation system by removing the four tiers, shifting to a uniform specific tax rate, indexing tax to inflation or income growth, and increasing tax rates regularly. ###