The Philippines has the highest score among Asean economies in a global study on cigarette tax policy performance, the Department of Finance (DOF) said in a statement yesterday, attributing this to recently implemented cigarette tax reforms.
The DOF said the Philippines got an overall score of 3.75 out of five in the Tobacconomics Cigarette Tax Scorecard, the highest among Asean countries.
“This was mainly due to our 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) — that removed the inherent weaknesses of the excise tax system like the multi-tiered structure, price classification fees and the lack of automatic indexation,” Ma. Teresa Habitan, DOF assistant secretary, said in her presentation on the Tobacconomics Scorecard during a recent executive committee meeting of the DOF.
Published last year, the study involving cigarette taxation in more than 170 countries said the Philippines was among the countries “with the greatest improvement in cigarette tax policy” resulting from “the simplification of previously complicated tiered cigarette excise tax structures, accompanied by large tax increases.”
RA 10351, implemented starting in 2013, imposed an increase in the excise or “sin” taxes on tobacco products and mandated an across-the-board uniform tax rate of P30 per pack beginning 2017.
This was followed by provisions in the TRAIN that was signed into law in 2017 and implemented starting January 2018 that further increased the excise tax rates on tobacco products.
The two other “sin” tax reform laws passed during the Duterte administration (RAs 11346 and 11467), which imposed additional substantial increases in the excise tax rates of tobacco products, and later, on electronic cigarettes, were excluded from the Tobacconomics study because its scope only covered the period from 2012 to 2018, the DOF said.
Habitan said the study used data from the World Health Organization (WHO) and focused on four aspects of cigarette tax systems: cigarette prices, changes in cigarette affordability over time, share of taxes in retail cigarette prices and cigarette tax structure.
The Philippines scored five, which is the highest, on changes in cigarette affordability owing to the significant tax increases over the six-year period, Habitan said.
