‘Sin tax’ boosts tobacco production: Economist

The “sin tax” reform signed by former President Benigno “Noynoy” Aquino III did not kill but rather boosted the tobacco industry.

Action for Economic Reforms (AER) senior economist Jo-Ann L. Diosana said that prior to the enactment of the Republic Act 10351 aimed at increasing the prices of cigarettes and liquors, her economic team thought that tobacco production is turning into a “sunset industry” due to decrease in production as a spinoff to higher taxes on tobacco products.

However, they were surprised to find out that production even increased as these raw tobacco items found export markets to neighboring countries such as Thailand, Vietnam and other nearby Asian countries.

“When we looked at the production between 2008-2012, these are the pre-Sin Tax Law implemented years, and 2013-2017, wherein the Sin Tax Law was implemented, the volume production ballooned,” Diosana said.

Revealing a data from the National Tobacco Administration (NTA), Diosana said an average of 34,616 metric tons of unmanufactured tobacco products were exported from 2008-2012. An increase of more than 5,000 metric tons were recorded from 2013-2017, years after the sin tax law was signed, with an average of 39,544.37 metric tons.

Diosana said that the domestic local manufacturers are those who are affected by the tax increase, due to the low domestic consumption.

Recently, a bill for the higher taxes on tabacco and alcohol was separately filled in both the House of Representatives and the Senate purposely to fund the Universal Health Care (UHC) law passed in November last year.

The new excise tax on these products will fill in the P68-billion gap in the first year implementation of the UHC law worth more than P257 billion. The law also aims to gradually reduce the tobacco consumption of Filipinos.