The Philippines outperformed its peers in the Association of Southeast Asian Nations (Asean) in an independent global study that rated cigarette tax policy performance over a six-year period from 2012 to 2018, according to the Department of Finance (DoF).
In a statement on Thursday, the DoF said the 2020 Tobacconomics Cigarette Tax Scorecard 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.”
In the Tobacconomics Scorecard, the Philippines earned the highest overall score of 3.75 out of 5 among the 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,” Finance Assistant Secretary Ma. Teresa Habitan was quoted as saying.
Beginning in 2013, RA 10351 increased the excise or “sin” taxes on tobacco products and required a uniform tax rate of P30 per pack across the board beginning in 2017.
This was followed by provisions in the Train Act that was signed into law in 2017 and implemented starting January 2018 that further increased the excise tax rates on tobacco products.
Since the Tobacconomics report only covered the period from 2012 to 2018, the two other “sin” tax reform laws enacted under the current administration (RAs 11346 and 11467), which imposed additional significant rises in the excise tax rates on tobacco products, and later, on electronic cigarettes, were removed.
The study used World Health Organization data and focused on four aspects of cigarette tax systems, according to Habitan: cigarette prices; changes in cigarette affordability over time; share of taxes in retail cigarette prices; and cigarette tax structure.