High taxes won’t stop vices — Enrile

By Macon Ramos-Araneta | Posted on September 3,  2012 (Monday)

 

The young and the old. An elderly woman takes a drag on a cigarette while the child inhales passive smoke. Danny Pata

 

SENATE President Juan Ponce Enrile said on Sunday imposing high taxes on “sin products” will not stop people from smoking cigarettes and drinking alcohol and their growing demand would attract smugglers.

He said he does not dispute the ill effects on the health of smoking and drinking, but increasing the prices of “sin products” will not prevent people from getting into vices.

 

The demand for cigarettes will stay, and this demand will be supplied by smugglers,” Enrile said in a radio interview.

 

The House of Representatives has approved a bill imposing a 708 percent tax increase on low-priced cigarettes, or those costing P11.50 per pack, which accounts for 60 percent of the market.

 

The Senate is discussing its own counterpart version. It’s still unclear whether they can end deliberations on the bill before they go on break for the Christmas holidays.

 

Health advocates said higher taxes on tobacco and alcohol will discourage people, especially the youths, from getting into the smoking habit, which is one of the causes of non-communicable diseases.

 

Enrile said more than two million tobacco farmers and workers will be affected and other sectors such as supermarket owners were alarmed at the dire impact on their business.

 

Steven Cua, president of the Philippine Amalgamated Supermarkets Association, said the multiplier effect of high cigarette prices will be increased production costs in the wholesale and retail industries, where tobacco products are considered as “traffic goods.”

 

He said inflation would be higher because cigarette manufacturers will pass on the tax hikes to customers and, because low-grade cigarettes have the same tax as high-grade cigarettes, the price will be beyond the reach of low-income consumers.

 

“A higher inflation rate would potentially imperil the country’s competitiveness, hamper the growth of exports and even jeopardize the country’s standing with rating agencies,” Cua said.

 

Enrile said the government intention to use for health purposes the income it would earn from sin products would not happen because the government would need the money to stop the smugglers.

 

“The high taxes will go to securing our coasts and our borders. So what then would go to health?” Enrile said.

 

“Let us allow what they want—the high taxes. That would still be in another four years. You will see they will regret it with the different kinds of cigarettes flooding the local markets that will be smuggled into the country,” he said. (END)