When Republic Act 10351 or the Sin Tax Reform Law was introduced December 2012, its intent was primarily to deter Filipinos from drinking and smoking by making the prices of alcoholic drinks and cigarettes prohibitive. The objective of the law is to protect people’s health against diseases associated with the two vices and correspondingly minimize the related medical expenses by government.

Smoking alone is linked to the top five non-communicable diseases that cause death among Filipinos, namely ischemic heart disease, cancer, stroke, hypertension and diabetes mellitus.

In the 2016 Global Burden of Disease study, 17 Filipinos die every hour from such diseases.

Health officials estimated the deaths from tobacco-related illnesses at 87,000 Filipinos per year. The Department of Health estimates the economic cost, including lost productivity, of smoking at P188 billion. For the health impact of alcohol consumption in the Philippines, there is no available data.

A 2015 Global Adult Tobacco Survey puts the number of Filipino smokers to 15.9 million, more than a million less since 2010. The figure is supported by the World Bank (WB) report titled “Tobacco Tax Reform: At the Crossroads of Health and Development” released October 2017 that cited the Sin Tax Law as cutting the number of smokers in the country to 25 percent of the population in 2015 from 30 percent in 2011. The WB report also said the number of cigarettes Filipinos smoked per day decreased from 10 to nine and the prevalence of smoking from 2012 to 2015 among youth (18–24 years old) dropped to 22 percent from 35 percent; for the wealthiest to 14 percent from 25 percent and among the poorest to 27 percent from 28 percent.

The figures indicate that the Sin Tax Law was effective. By 2013, the Sin Tax Law assessed a pack of cigarette retailing at P11.50 by P12 while those priced higher were slapped with P25 tax. The following year, the tax on low-priced cigarettes was increased to P17. By 2017, taxes for both kinds of cigarette were P30 with a four percent annual increase in succeeding years.

The higher incremental tax on cigarettes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law of 2017 is expected to further reduce the number of smokers in the Philippines.

TRAIN imposed an excise tax of P32.50 per pack of cigarettes from 1 January to 30 June 2018 and increases it to P35 from 1 July next year to 31 December 2019, P37.50 a pack from 1 January 2020 to 31 December 2021 and P40 from 1 January 2022 to 31 December 2023.

Ironically, TRAIN is offsetting the cigarette tax with its personal income tax (PIT) exemption for workers getting a salary of P25,000 that allowed smokers to afford the more expensive habit. Tax revenues from TRAIN also funded the free public college tuition of the government and the savings of families from educational expenses were partly spent on buying cigarettes.

Finance Secretary Carlos Dominguez III estimated that TRAIN put an additional P12 billion in the pockets of taxpayers every month through the PIT exemption and P3.5 billion from savings in school fees from the law’s free tuition provision.

In fact, cigarette purchases and alcohol consumption in the first six months of the year increased, according to Finance Assistant Secretary Mark Dennis Y.C. Joven. The excise tax collections from tobacco products and alcoholic drinks rose by 41.03 percent to P112.46 billion in the first half of 2018, from P79.55 billion a year ago, according to the latest data released by the Department of Finance. The collections from “sin” products exceeded the government’s target of P77.54 billion for the period. The lion’s share from the collection or P78.95 billion came from cigarette products, 53.5 percent higher than the P51.43 billion collected in the first six months of 2017. Total excise taxes collected from alcoholic beverages also increased 19.2 percent to P33.51 billion from P28.11 billion last year.

So, are the Sin Tax Law and TRAIN backfiring and defeating the intent to reduce the number of smokers and the cost of healthcare for people suffering from tobacco-related afflictions?
Valerie Gilbert Ulep, research specialist at the Philippine Institute for Development Studies, observed that it is so. He also cited the growing economy as increasing the people’s disposable income, including the poor who also use their Pantawid Pamilya cash grants in buying sticks of cigarettes.

Then there is the reality of smoking as a hard habit to break. Despite the implementation of Republic Act 10643 of 2014 or the Graphic Health Warning Law, many are not turned off by the graphic pictures in cigarette labels. Also ignored is Executive Order 26 that President Duterte signed in May 2017. The order bans smoking in public places nationwide, except in designated areas.

In 2017, excise tax collection reached P89.09 billion. By the first half of this year, collection already reached P152.72 billion, 71.42 percent higher than the total 2017 collection. While this falls short of offsetting the P190 billion economic cost of smoking, it is funding social services and infrastructure projects. The tax helps finance the Universal Health Care program of the government that also covers smokers.

It seems fair enough for all TRAIN beneficiaries to ignore cigarette patrons even if the latter pay P60 tax per pack as proposed by Sen. Manny Pacquiao or P90 per pack as suggested by his colleague Sen. Miguel Zubiri.

As for increasing tax on alcohol to discourage drinking, the outcome can be the same as that of tobacco. Tax collection from alcoholic beverages under TRAIN was P33.51 billion in the first half of 2018, 19.2 percent higher than the P28.11 billion recorded last year. This will surely increase with the largest brewery in the country building 10 more plants in the next two years to meet the demand of the population and increase the alcohol appetite of every Filipino that currently stands at 10.6 liters per capita.

Sin products are just so irresistible. But the “sinners” are also giving back.