Finance Secretary Cesar Purisima is evidently censuring the poor smokers for favoring cheap cigs. He declared that the government lost P32.4 billion in incomes from 2006 to 2010, as the current high tax embolden smokers and beer-drinkers to purchase cheap cigarettes and alcohol beverages. The declaration is Purisima’s way of convincing the senators to endorse HB 5727 that will impose extra tax of almost 700 percent on low end, cheap smoking brands.
According to Finance Secretary Cesar Purisima, the multi-tiered structure under the present “sin tax” system has resulted to past revenues of P19.5 billion due to the downshifting to lower-priced cigs during the four-year period, and P12.9 billion due to the downshifting of consumption to lower-priced alcohol products.
Purisima argued that the foregone revenues in smoking products could have been spent on healthcare services, such as Philhealth premium financial aid to eight million poor families, rotavirus vaccine to 29 million kids, various vaccines to nine million children, and influenza and pneumonia vaccine to 11 million senior inhabitants.
“We considered that the reduction in the share of high and medium priced tobacco brands to be 18 per cent, translating to almost 4.2 billion packages lost, equal to P19.5 billion in revenue foregone for the government,” Finance Assistant Secretary Ma. Teresa Habitan reported over the weekend.
Purisima reported that while smokers shifted to lower-priced cigs, the state health cost of smoking remains the same.
“They do not know that the health cost of tobacco is the same, indifferent of the price,” the finance chief added.
The Department of Health argued that during its presentation at the Senate Committee on Ways and Means high tax hearing last week that the estimated health cost of smoking tobacco in 2011 is P177 billion, which is a signal especially in comparison to the P26 billion excise tax revenues collected by the government year ago.