Groups bat for higher tobacco tax

The University of the Philippines College of Law is prodding the Aquino administration to adopt a uniform tax structure on tobacco products to jack up state revenues and make cigarettes less affordable to the youth.

In a policy paper co-written by HealthJustice, the law school said the immediate step involves removing the price classification freeze and reducing the number of tiers from four to three.

The second step further reduces the number of tiers from three to two and ensures that cigarette prices will be less affordable to the youth. The tax will be adjusted from P12 to P16 for the medium- and high-priced brands, and from PP28.30 to P29.40 for the premium brands.

The two groups likewise asked the government to shift to a single tier tax structure, wherein the uniform specific rate will be P30 for all brands to compensate for inflation and increases in income.

After attaining the single level tax structure, the two groups suggest that excise taxes be annually increased to adjust to inflation.
They said the excise tax rate must be regularly increased by at least a rate that is greater than inflation.

Assuming that price elasticity of demand for cigarettes is between -0.235 and -0.5, implementing this excise tax increase proposal will reduce smoking prevalence to 23 percent to 25 percent by 2014, the two groups said.

The use of tobacco products among the Filipino youth is on the rise, with smoking prevalence increasing by almost 40 percent within a span of four years, according to the study.


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