health in the past 10 years. The currentmulti-tiered tax system puts the youth andthe poor in a trap by the ills of smoking anddrinking as it encourages them to shift fromhigher-priced to lower-priced brands.Increasing the tax and price ofcigarettes and alcohol will effectively helpprotect the young and the poor from theharmful effects of smoking and drinking.Addiction to smoking and drinking usuallyhappens when individuals start these vicesat a very young age. Studies have alsoshown that the health effects of smokingand drinking are worst for those who beginsmoking and drinking in their youth. Hence,the young population needs the mostprotection from picking up these vices.On the other hand, the poorsmokes and drinks more than the rich. Thepoor also have the least capacity to get theneeded health care when they get sick dueto smoking- and alcohol-related diseases,and are the most vulnerable to chronicpoverty when they experience health shocksdue to these vices. Moreover, the pooresthouseholds spend more on tobacco andalcohol more than education or health care.Hence, the poor also needs to be protectedfrom the harm caused by smoking anddrinking.Local studies and reports showthat many Filipinos are dying and thePhilippines is in a health crisis. Some 515 to827 Filipinos contract smoking-related lungcancer and lung and heart diseases DAILY!About 240 Filipinos die daily because ofsmoking-related diseases. Of the 10 leadingcauses of mortality, seven (7) are smokingrelated.Although government revenue fromtobacco taxes is about P23 billion annually,the economic burden of health costs andproductivity losses of only four smokingrelateddiseases – cancer, heart diseases,stroke and chronic pulmonary diseases –add up to P148 to P314 billion yearly in thecountry.The government is in a financialcrisis and it badly needs more revenues.Increasing sin taxes will be the most effectiveand efficient tool to raise a significantamount of revenues in the short to mediumterm. Even with improved tax administrationunder the Aquino administration, tax efforthas remained low at 12% of gross domesticproducts (GDP). Moreover, GDP growth ratewas only 3.7% in 2011. While the budgetdeficit was reduced to P96 billion in 2011,the government was not able to spend foressential public services, which is the mainreason for the close-to-stagnant status ofthe economy in 2011.Why the Abaya BillThere are 12 pending measures inCongress seeking to restructure the excisetax on alcohol and tobacco products, butthe one being supported by the Aquinoadministration is House Bill (HB) <strong>No</strong>. 5727,penned by Cavite Representative JosephEmilio Abaya, the chair of the Housecommittee on appropriations.The following are the salientfeatures of the Abaya bill:• IT MOVES FROM A MULTI-TIEREDTO A UNITARY TAX SYSTEM: It will simplifythe current multi-tiered tax structure. Onlyone tax rate for all cigarettes and one tax ratefor distilled spirits;• IT INDEXES TAXES TO INFLATION:After reaching the unitary tax system, taxeswill be automatically increased yearly, tofollow inflation; and• IT DEDICATES TAXES TOUNIVERSAL HEALTH CARE AND ALTERNATIVELIVELIHOOD FOR TOBACCO FARMERS: Part ofthe taxes will be used for the Aquino HealthAgenda of providing universal health care forall Filipinos. Another portion will be used toaid tobacco farmers in shifting to alternativeand more lucrative livelihoods.This sin tax reform would have theeffect of raising an additional P400 billion inrevenues for the government during the lastfour years of Aquino’s term.Meanwhile, the Department ofHealth projected that an increase in sintaxes would generate at least P60.7 billionin additional government income annually.Of this amount, P45 billion will be allocatedto tobacco farmers while the remainingwill be used to fund the government’suniversal health care agenda or KalusuganPangkalahatan.Here Comes The OppositionThe move to raise sin taxes is beingopposed by lawmakers from the Solid <strong>No</strong>rth– the traditional tobacco-growing regionsof Ilocos, Cagayan Valley and Central Luzon– claiming it would kill the tobacco industryand threaten the livelihood of 2.9 milliontobacco farmers and workers and theirdependents.Ryan Singson, Ilocos Sur 1stDistrict Representative, warned that ifthe government proceeds with its plan ofadopting a unitary tax system for alcoholand tobacco products, tobacco-producingfarmers of his province would have a difficulttime finding buyers for their products.The unitary tax system would makecigarette brands currently taxed at P5 perpack pay P40-P45 per pack in three years.Meanwhile, local distillers led by the giantSan Miguel Corporation, also warned thatthe 1,000-percent hike in taxes being soughtby the sin tax measure would drive localplayers out of business and leave hundredsof thousands of workers jobless as domesticbrands would lose their price advantage overforeign brands.Singson filed a substitute versionof the sin tax bill that supposedly intends to34 HEALTHbeat I <strong>March</strong> - <strong>April</strong> <strong>2012</strong>
alance competing interests, but a carefulscrutiny of the bill shows that it does notserve the public interest.According to the Action forEconomic Reforms, an independent,reform-oriented policy group that conductsanalysis and advocacy on key economicissues, the Singson bill does not reformthe existing weak and backward law. Itintroduces a new classfication system thatwill merely perpetuate the weaknesses inthe law. It does not introduce indexationto inflation. Its tax rates are very low, andcannot even correct the losses from inflationin the previous years. This defeats the twinobjectives of significantly yielding revenuesfor government and stemming the rise ofboth communicable and non-communicablediseases arising from tobacco and alcoholconsumption.Pro-Abaya Bill in Full Forceproducts, he had come to the conclusionthat only manufacturers prospered at theexpense of the farmers.Chavit said that he was alarmedwhen two giant tobacco companies mergedbecause they would monopolize theindustry to the detriment of farmers andsmall companies. He vowed to explain thebenefits of supporting and passing of theAbaya bill to other congressmen and tobaccofarmers in his area.Meanwhile, Umali who leadsthe LPP, the organization of all provincialgovernors in the country, said, “The LPPsupports this landmark legislative measure(HB 5727) which will generate revenues tofinance public-private partnership projects,prevent smoking related expenditures, andsave young and poor countrymen fromlifestyle diseases.”Former Finance SecretaryMargarito Teves also expressed the urgencyon the enactment of the Abaya bill, whichhe said is an “improved” version of theDepartment of Finance’s (DOF's) proposalunder the Arroyo administration. “I wantit to be like the Conditional Cash Transfer.The funding for tobacco farmers was notincluded on our proposed bill during mytime. But with HB 5727, farmers are assuredof income in the event that they would shiftto other crops,” he said.The bill provides a safety net forthe tobacco farmers. The history of tobaccofarming in the Philippines showed that it isdeclining and a lot of farmers have shiftedto other crops. In the 1990s, <strong>69</strong>,000 hectaresin the country were used for tobacco, but itis now down to 30,000 hectares. In studiesmade by the Department of Agriculture, thepossible alternatives for tobacco would besweet corn, tomatoes, sweet pepper andbitter gourd.Aside from Teves, 12 formerThe League of Provinces of thePhilippines (LPP) through its NationalPresident, Oriental Mindoro GovernorAlfonso “Boy” Umali and its NationalChairman, Ilocos Sur Governor Luis “Chavit”Singson recently joined mounting calls forthe passage of the Abaya bill. With Chavitin this corner of the arena going againsthis son’s bill, the sin tax debates becomesmore intriguing.“It’s high time that we raise thetaxes for tobacco products as this will notonly raise funds for the health sector butbenefit the tobacco farmers,” proclaimedChavit whose province is the among theleading producers of tobacco products inthe country. “I am calling our honorablelegislators to approve the Abaya Billand pave the way for the realization ofthe Universal Health Care,” added theGovernor. He said that after years ofopposing increased taxes on tobaccoIN FULL FORCE PUSHING FOR THE ABAYA BILL. From left to right: Oriental Mindoro Governor Alfonso “Boy”Umali, Health Secretary Enrique T. Ona, Ilocos Sur Governor Chavit Singson, and BIR Commissioner KimHenares. (Photo by Paking Repelente)<strong>March</strong> - <strong>April</strong> <strong>2012</strong> I HEALTHbeat 35