PH Tobacco Tax Coverage Receives Highest Rating – Manila Bulletin

The Philippines received the highest score among its counterparts in the Association of Southeast Asian Nations (ASEAN) for improving cigarette tax policies, the Treasury Department (DOF) said.

In a statement on Thursday, May 20, the DOF said the Philippines were among the countries with the “greatest improvement in cigarette tax policy” between 2012 and 2018, based on the latest Tobacconomics Cigarette Tax Scorecard.

A report presented to Treasury Secretary Carlos G. Dominguez III showed the Philippines scored 3.75 out of 5 on the Tobacconomics Scorecard, the highest among ASEAN.

Financial Assistant Secretary Ma. Teresa Habitan said that Tobacconomics had taken note of the Philippines in particular, “the simplification of previously complicated tiered excise structures for cigarettes, accompanied by large tax increases”.

The country scored 5, which is the highest score for changes in the affordability of cigarettes due to the significant tax increases over the 2012-2018 period.

Regarding the share of taxes in cigarette retail prices, the study followed the recommendation of the World Health Organization (WHO) that the excise duty on cigarettes should represent at least 70 percent of the retail price of the product.

In this regard, the Philippines, along with Singapore and Thailand, scored 4 points as their excise duty is at least 65 percent but less than 75 percent of the retail price of cigarettes.

The Philippines, meanwhile, was the only country in ASEAN that achieved the highest score of 5 for the cigarette tax structure due to its unified tax system with an annual indexation rate for tobacco products.

The Philippines’ only low score was 1 for cigarette prices as the cost of cigarettes per pack in 2018 was still relatively cheap compared to other ASEAN countries.

The Tobacconomics Cigarette Tax Scorecard is an independent global study that assessed the performance of cigarette tax policy over a period of six years.

The five-point scorecard rating system is derived from the data in the tax / price annexes to the WHO biennial report on the Global Tobacco Epidemic (RGTE).

Habitan attributed the significant improvement in tobacco tax policy to cigarette tax reforms – Republic Act (RA) No. 10351 (first sin tax reform act) and RA 10963 (tax reform for acceleration and

Inclusion Act or TRAIN). She said these two measures removed the inherent weaknesses in the excise tax system such as the tiered structure, price classification fees and the lack of automatic indexation.