SI N TAXes
ON TOBACCO AND ALCOHOL
OBJECTIV
OBJECTIV
Determine the Examine the Weigh the relevance economic, Provide ofand the advantages reforming the and environmentalSin recommendationsTax disadvantages of Law in human thethe Sin about the issue. Tax reforming Philippines. developmental Law. effects of sin taxes.
WH AT IS?
These are taxesImposed for added to products that are seen as various reasons, vices (alcohol, tobacco considered and gambling) harmful to communities Only affect those who produce and consume the products
A form of Pigouvian tax
SI TAX
source of governmentor minimal revenue. no effect on
WH AT IS?
consumptio n if tax is levied on an inelastic good. Levied by governments to discourage individuals from partaking in such activities
SI TAX N
Republic Act 9334
AN ACT INCREASING THE EXCISE TAX RATES IMPOSED ON ALCOHOL AND TOBACCO PRODUCTS, AMENDING FOR THE PURPOSE SECTIONS 131,141, 142, 143, 144, 145 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF
SI TAX N
law
Tobacco current SITUATIO
N Sin Tax
Taxes are collected per kilogram four tier tax system that depends on the Alcohol net retail price per Taxes are collected per pack: low-priced, liter of volume capacity medium priced, high priced and very high Includes wine and priced.
fermented liquors.
This classification is based on 1997 prices.
current SITUATIO
N Sin Tax
Cigars/Cigarettes
current SITUATIO
N Sin Tax
Taxes are collected per pack provided that it has 20 sticks per pack.
current
Issue
So, reforms were suggested, particularly adoption of UNITARY TAX SYSTEM for tobacco which are adjusted annually for inflation. (DOF)
Sin Tax Law
Philippine excise taxes are low compared to international standards.
current tax system hasn't changed since 1997.3
current
Issue
So, reforms were suggested, particularly adoption of UNITARY TAX SYSTEM for tobacco which are adjusted annually for inflation. (DOF)
Sin Tax Law
Philippine excise taxes are low compared to international standards.
current tax system hasn't changed since 1997.3
HOU SE BIL NO.
proposes the indexation of the prices of alcohol and tobacco products as proposed by the Department of Finance (DOF)
Adoption of a
572 L 7
from a multi-tier system and indexation of prices to inflation. Status: PENDING
UNITARY TAX SYST
consumers
could be an effective means to discourage those who are just planning to start smoking
Negative externality to nonsmokers (secondhand smoking)
HEALTH
ISSUES
On
DECREASE in consumption
TOBACC PROS O
Accdg. To Dr. Antonio Dans of UP College of Medicine, 200,000 Filipinos die yearly from non-communicable diseases (NCDs) such as cancer and heart illness.
consumers
Strong correlation between alcohol use and domestic violence
In the Philippines, alcohol is one of the major factors consistently leading to the occurrence of youth violence.
SOCIAL
Crime and violence impede COSTS:and development growth because they erode the development of human capital, destroy social capital and consume government resources that could be used for other development purposes. (Ayres, 1998)
On
DECREASE in consumption
PROS
ALCOHO
15% of the
PRODUCERS
incremental revenues from cigarette excise tax reforms (est. at P29 billion for the next five years) be dedicated for alternative livelihood programs for farmers in provinces producing Burley and Native tobacco.
move to a unitary tax
system will increase competition in the tobacco industry
Survey of Tobacco Growing Areas in the Philippines in 2008
On
TOBACC PROS O
PRODUCERS
consumption will not fall as much, hence profits will not be so much affected unlike the welfare that the consumers will lose due to its inelastic demand.
The introduction of a unitary rate of excise taxes will correct a long time practice of using excise taxes as a protective vehicle for a domestic industry
says Prof. Gerardo Sicat.
On
DECREASE in consumption
PROS
ALCOHO
Leveling the prices of imported goods to the domestic prices of the same good will increase competition hence efficiency.
Methods of smuggling are as many and varied as the smuggler has imagination to dream up. From concealment to bribery, smuggling leads to revenue losses by the government and often the seeds for other crimes
creates underground
markets, which tend toward corruption and violence, and fosters disrespect for the law.
Smuggling and Counterfeiting
CONS
Lower consumption could negatively impact people whose livelihoods are on manufacturing (employees), growing (farmers) and selling (retailers) tobacco and tobacco products as well as alcohol.
It lowers profits for the seller, and leads to reduced investment, wages, and jobs.
Hurt Businesses
CONS
Higher prices of cigarettes would slightly increase the share of income devoted to expenditures on cigarettes for a large range of increases
It reduces the income of the buyer.
HITS THE
CONS
It may eventually decrease government revenue, especially as people move their business to the informal sector.
Governement Revenues
CONS