PH tobacco tax policy receives 'highest score'
The Philippines received the highest score among its peers in the Association of Southeast Asian Nations (ASEAN) in terms of improvement in cigarette tax policy, the Department of Finance (DOF) said.
In a statement, the DOF said on Thursday, May 20, that the Philippines was among the countries “with the greatest improvement in cigarette tax policy” between 2012 and 2018 based on the latest Tobacconomics Cigarette Tax Scorecard.
A report submitted to Finance Secretary Carlos G. Dominguez III showed that the Philippines got an overall score of 3.75 out of 5 in the Tobacconomics Scorecard, the highest among the ASEAN.
Finance Assistant Secretary Ma. Teresa Habitan said that Tobacconomics particularly took note of the Philippines "simplification of previously complicated tiered cigarette excise tax structures, accompanied by large tax increases.”
The country scored 5, which is the highest, on changes in cigarette affordability owing to the significant tax increases over the 2012 to 2018 period.
On the share of taxes in retail cigarette prices, the study followed the World Health Organization (WHO) recommendation that cigarette excise tax should account for at least 70 percent of the retail price of the product.
In that aspect, the Philippines, along with Singapore and Thailand, scored 4, because their excise tax is at least 65 percent but less than 75 percent of the cigarette retail price.
The Philippines, meanwhile, was the only country in ASEAN to get the highest score of 5 on cigarette tax structure because of its unitary tax system with an annual indexation rate for tobacco products.
The Philippines’ only low score was 1 for cigarette prices because the cost of cigarettes per pack in 2018 was still relatively cheap compared to those in other ASEAN countries.
Tobacconomics Cigarette Tax Scorecard is an independent global study that rated cigarette tax policy performance over a six-year period.
The scorecard’s five-point grading system is derived from the data in the tax/price-related appendices of the biennial WHO Report on the Global Tobacco Epidemic (RGTE).
Habitan attributed the significant improvement in the tobacco tax policy to cigarette tax reforms—Republic Act (RA) No. 10351 (first Sin Tax Reform Law) and RA 10963 (Tax Reform for Acceleration and
Inclusion Act or TRAIN). She said these two measures removed the inherent weaknesses of the excise tax system like the multi-tiered structure, price classification fees and the lack of automatic indexation.