Philippines Tackles Tobacco Addiction with Taxes

February 29, 2012 Taxation in Philippines

Tobacco Excise Duties in Philippines to be RaisedMANILA – The government of the Philippines will update the nations excise taxes on the sale of cigarettes, to lower the country’s smoking rate and to increase government revenues.

On February 28th the House of Representatives of the Philippines held a hearing on a new bill proposing an overhaul to the excise taxes imposed on the sale of cigarettes in the Philippines, which will instate a single unitary tax rate to be adjusted annually in line with the level of inflation in the country.

The government currently estimates that the new tax could raise as much as PHP 400 billion in tax revenues by 2016, of which approximately PHP 225 billion will be used to create new projects to help local farmers convert their tobacco plantations to other types of crops.

The Department of Health of the Philippines has suggested that a portion of the newly raised revenues should be allocated to healthcare and programs to discourage smoking. It is estimated that up to 55 percent of the population of the Philippines currently uses some form of tobacco products.

The Department of Health explained that smoking is more common amongst poorer members of society in the country, and increasing the taxes on cheaper brands of cigarettes could push prices out of the reach of many smokers.

The proposed tax is opposed by a number of politicians in the Philippines, who claim that the new measure will lead to a significant increase in the occurrence of smuggling of tobacco into the country.

Photo by smokershighlife