The World Health Organization (WHO) has described the Philippines’ efforts to impose higher excise taxes on alcohol and tobacco products as an international model for cost-effective promotion of health and reduction of non-communicable diseases (NCD), during the recent launch of the WHO’s “Philippine NCD Investment Case Report. ”
The Duterte administration’s “actions to prevent NCDs in the Philippines are relatively cheap and cost-effective,” according to this WHO report, which “identifies which policy packages would provide the greatest returns on investment.”
This government’s earmarking of excise taxes on alcohol, tobacco, and nicotine vapor products for implementing Universal Health Care (UHC) makes the Philippines “a forerunner in allocating sin tax revenue to health programmes,” the WHO report added.
The WHO report comes as the Departments of Finance (DOF) and of Health (DOH) jointly push for the urgent passage of Senate Bill (SB) No. 1074, which significantly raises ‘sin’ tax rates on alcohol, heated tobacco, and e-cigarette products.
“Most of these policy interventions are also WHO best buys: that is, effective interventions with a cost–effectiveness ratio of less than or equal to 100 international dollars per disability-adjusted life-year averted in low- and middle-income countries,” the WHO report said of the country’s sin tax measures.
Meanwhile, the DOF has also expressed support for the WHO report’s recommendation of adopting comprehensive approaches to tackling non-communicable diseases (NCDs).
“The DOF is one with our partners in the WHO in supporting comprehensive approaches to truly address the health impacts of sin products,” Finance Assistant Secretary Antonio Lambino II said during the recent launching of the WHO report that was held at the Manila Hotel.
“Tax reform is an important part of this effort, raising prices especially for the most vulnerable segments of society,” he added. “They also generate revenues to fund holistic health programs from the higher contributions of those who insist on consuming unhealthy products, the same consumers whose medical care will cost more to society in the future anyway.”
“In fact, our partners in the legislature, especially (Senate ways and means) Chairperson Pia Cayetano, have been supportive of a dual approach where excise taxes go side-by-side with rehabilitation and quitting programs.” Lambino said.
The WHO report described increasing taxes on ‘sin’ products as “one of the most effective measures a government can take to reduce their consumption, improving population health while increasing government revenue for national development priorities.”
This report also noted that, “The tax rate on alcoholic beverages remains low, at 22 percent of the retail price.”
Lambino, during his panel reaction at the report launch, also emphasized that ‘sin’ taxes, in addition to generating revenues for health, also control the economic costs of associated risks.
“The annual economic cost of alcohol is estimated to be at over 1 percent of GDP, equivalent to about a third of the country’s total health expenditures,” Lambino said.
Lambino also emphasized the government’s seriousness in taxing ‘sin’ products to fund its ambitious human capital investments, noting that the Philippines has passed taxes on tobacco products successively, with Republic Act (RA) No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN), and RA 11346, which imposed higher taxes on regular tobacco products and new taxes on e-cigarettes.
“This administration is the only one in the country’s history to have increased excise taxes on tobacco twice, while supporting tobacco farmers through a special earmark,” Lambino said, to applause from the audience of academics, medical experts and professionals, government officials and leaders of civil society organizations.
RA 11346 is also the only tax law in the country’s history to have been passed by the Congress during the period usually considered as the “lameduck” session, when the Legislature reopens briefly after elections and just before the sine die adjournment or end of the congressional term.
“The Duterte administration’s comprehensive tax reform program (CTRP) seeks to create a tax environment that enables better socioeconomic outcomes. We certainly see ‘sin’ taxes not only as a component of the CTRP but also as a part of the country’s health and human capital development strategies.” Lambino said.
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