• May 26, 2024

Philippine Tax Reform Paid Off: Study

 Philippine Tax Reform Paid Off: Study

Repeated increases of “sin taxes” in the Philippines have not only driven down smoking prevalence, but also boosted the government’s health budget, reports The Philippine Star, citing a working paper published by the Institute for Leadership, Empowerment and Democracy.

More than 10 years after the passage of the landmark 2012 Sin Tax Reform Law, the study found that sin tax reforms on alcohol, tobacco, e-cigarettes, vape and heated tobacco products have generated PHP1.1 trillion ($21.66 billion) in additional revenue above the 2012 baseline.

The annual health budget increased six-fold to PHP309 billion in 2023 from PHP53 billion in 2013. Despite the higher taxes, cigarettes remain affordable, at PHP100 per pack and PHP5 per stick, according to the report.

From 2012 to 2022, real value of tobacco production has grown by 6.6 percent. However, the researchers noted that these findings must be validated through individual-level surveys of tobacco farmers.

Given the resilience of the tobacco business over the past decade, the author’s concluded that there is room for further tax increases.