Press Release
November 12, 2012

Miriam: Raise Sin Taxes, Avoid Fiscal Cliff

Senator Miriam Defensor Santiago, Senate sponsor of the Framework Convention on Tobacco Control (FCTC), called on her fellow senators to raise sin taxes to decrease government spending on healthcare costs from tobacco-related diseases.

The FCTC was ratified by the Philippines in 2005. It was the first treaty negotiated under the auspices of the World Health Organization; and was developed in response to the global tobacco epidemic.

Santiago said that the Philippines must raise sin taxes and reduce smoking prevalence, consistent with the country's commitments under the FCTC.

"It is too late for industry leaders to raise their objections now," Santiago said. "They should have raised their objections in 2005, when the Philippines was about to ratify the FCTC."

"This treaty has morphed into international law. The Philippines will become a rogue state if we do not comply with our obligations under the FCTC," Santiago warned.

In 1998, government spending on the four major tobacco-related disease--heart attack, stroke, lung cancer and emphysema--was at P 47 billion per year. In 2005, the economic cost of tobacco use was estimated at over PHP148 billion a year, while revenues generated from the tobacco industry were only at about 25.65 billion pesos. A more recent study by Dr. Antonio Dans and colleagues in 2011 revealed that healthcare costs of tobacco use from just the four major tobacco-related diseases was already estimated to be at P 188 billion, whereas the revenues generated were only at P 26 billion for the same year.

"Looking at all the numbers, we see that the estimated healthcare costs are increasing tremendously through the years. Meanwhile, the revenues being generated by our government from the tobacco industry seem to be increasing but at a very slow pace. From these figures alone, the Philippine government and the Filipino people are at a losing end. Healthcare costs far outweigh the revenues being generated from tobacco," the senator said.

Santiago stressed that it should be noted that these healthcare costs are all underestimated since these only covered the four major diseases. It did not include the more than 40 other diseases, such as cancers other than lung cancer, occlusion of arteries to the leg, aneurysms, asthma attacks, and many more, related to tobacco use as well as exposure to secondhand smoke.

According to Santiago, Senator Franklin Drilon's substitute bill will have almost the same health impact relative to her bill by 2016 as the tax system moves to a unitary tax rate of P32 per pack. However, Santiago claimed that her bill will have a greater health impact on the first year of implementation with 75,000 to 90,000 lives saved versus 66,000 to 79,000 lives saved for the Substitute Bill.

"The Substitute bill will be able to achieve the same health target of reducing smoking prevalence by 10% in 2012; however, my bill will have a greater impact on reducing smoking prevalence," Santiago said.

Citing the Global Adult Tobacco Survey of 2009, Santiago said that an estimated 17.3 million Filipinos aged 15 years and above smoke, and 13.8 million of these individuals smoke cigarettes every single day. Santiago added that there is very strong evidence linking smoking to poverty and drainage of the economy because of deaths and disabilities. The senator claimed that raising sin taxes will curb the occurrence of non-communicable diseases caused by smoking, which occur in people aged 15-59 years when people are very much still in their productive years.

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