My Four Centavos

Syntax 2

“Unless we remember, we will never understand.”

— E.M. Forster

As a sequel to our March 17 “Syntax” column, let me share with you a user friendly frequently asked questions (FAQs) format on the “Sin Tax” bill (House Bill 5727, as amended). These FAQs were provided by the recently retired (from corporate medical practice), Dr. Tony Leachon, who now serves as a consultant to the Department of Health. When I started writing beginning of the week, the bill’s fate was uncertain. I was therefore pleased when it was approved on third and final reading last Wednesday with 210 House members voting in the affirmative.

Q: Will the farmers’ livelihood be imperilled because of higher cigarette prices and lower consumption brought about by HB 5727? A: No. 1. Tobacco farmers have already been switching to more profitable and suitable crops like corn, garlic and tomato.

2. The tobacco industry is considered a “sunset industry” due to the declining land use and crop production.

3. The bill provides that 15% of the incremental tobacco revenues to support alternative livelihoods for the farmers.

4. There are still options for those who wish to continue planting tobacco. Q: Will HB 5727 intensify smuggling? A: Not necessarily. 1. The root cause of smuggling is not high prices per se, but lack of political will, corruption and poor law enforcement.

2. There have been many countries like China, Spain and Canada that have successfully curbed smuggling in spite of a tax hike – and this was possible due to strong government commitment.

3. Cigarettes and alcohol prices in the Philippines are comparatively low and even with a tax increase, we will not exceed those of our neighbors and thus will not significantly cause a surge in illicit trade.

4. BIR plans to implement tax stamps and other measures to curb smuggling. Q: Why is it better to simplify the tax system? A: The current multi-tiered structure does not discourage consumption — it only works to encourage downshifting to cheaper variants. The idea of taxing sin products similarly is not simply to discourage consumption of a particular brand or price category but to dissuade consumption of cigarettes and alcohol in general.

Q: Why is there a need to increase the tax rates significantly?

A: First, the current tax rates have proven to be ineffective in curbing cigarette and alcohol consumption. “Enjoying” one of the cheapest cigarettes in the region has led to high cigarette consumption. Currently, 240 Filipinos die daily because of smoking-related diseases.

Second, the Philippines is a party to the Framework Convention on Tobacco Control, the first international health treaty where we pledged to reduce smoking prevalence from 28.3% at present to 25% by 2014.

Third, the sin taxes have already been “frozen” for 16 years due to the price classification freeze. The significant tax increase is an attempt to pay for the large health and economic costs (minimum of P188 billion in 2011 according to the UP-PGH study of Dr. Antonio Dans) due to tobacco-related deaths and diseases in the Philippines. Q: Why should we support HB 5727? A: It is ONE bill with SEVEN wins for 92 million Filipinos

1. Youth — Higher prices will deter the youth from starting smoking early.

2. Under- resourced — Higher prices will disincentivize the under-resourced from continuing their addiction and save them from the significant economic and health burden of tobacco-related diseases.

3. Farmers — 15% of the incremental tobacco revenues will be allotted for programs to support shifting to other alternative and economically viable livelihoods.

4. Health — Reduced consumption of sin products will lead to better health outcomes. The remaining incremental revenues (more than 85%) will go to funding the UHC program.

5. Economy — Widening and deepening the tax base will lead to improved fiscal health and greater spending for social services. More investments plus greater spending in infrastructure will lead to a virtuous cycle of growth and development.

6. Politicians — Increased revenues will translate to higher allocations for LGUs/congressional districts.

7. Future of the Filipino People — Better health equates to a more productive workforce and a more inclusive development for the Filipino people. Good memories: Amidst the traditional English pomp and pageantry of carriage rides and beacon lights, Her Majesty Queen Elizabeth II celebrated her Diamond Jubilee, marking the 60th year since her assumption to the throne. This makes her the second longest serving (but still counting) British monarch, next to Queen Victoria who presided over an Empire “where the sun never set” for 63 years. The Queen was toasted by her eldest son and heir apparent, Prince Charles, not with a staid “Long live the Queen” but with a more hip “Hip, hip hooray” which was then followed by a spectacular fireworks display while the tune that we usually associate with school graduations played in the background. I am certain that the great memories from the various activities will linger not only in the British, but the world consciousness, in the years to come. Our our own P-Noy was fortunate to have been invited to conduct an official visit to the United Kingdom during this auspicious occasion. Not so good memories: Still speaking of memories, there is a line in “The Way We Were” which goes “What’s too painful to remember, we simply choose to forget.” This seems to have been the attitude of the Chinese authorities in respect of the 1989 Tienanmen Square massacre.

But “numbers do not lie.” And for a country steeped in superstition and numerology, the Shanghai stock market’s performance last June 4 seemed to eerily remind the Chinese populace of the massacre which happened on that same day 23 years ago.

The Shanghai index opened at 2346.98. The 23 refers to the 23rd anniversary of the killings while the 46.98 stands for the infamous date rendered backwards.

By the end of the day, the market had tumbled 64.89 points which again freakishly coincides with the 6/4/89 crackdown of pro-democracy protesters in Beijing. So while the authorities endeavor to make the people forget, the gods make sure they remember.