|
23 October 2003
Sin taxes
IF you're a smoker and
are off to France any time soon, better make sure you bring cigarettes
from here. As of this week, a pack of 20 cigarettes in France costs, on
the average, 5.40 euros. At 80 pesos to the euro, that's 432 pesos a
pack.
The new prices represent a 20-percent increase over the old ones, and
are due to new taxes imposed by the French government. The response has
been swift and furious, with tobacco shop owners going on strike last
Monday to protest the increases.
It'll be interesting to
see what happens next. Smokers and the tobacco shop owners say the
French government is thoughtless, ready to do anything to raise more
money. The government insists it is doing this more for public health
reasons, a way of encouraging more smokers to quit.
This battle in France offers us the latest example of how one aspect of
public policy -- taxes -- may be used for or against public health. More
specifically, we're looking at sin taxes, a term that is itself rather
odd in the way it's defined. Sin taxes are those imposed on what a
society might call "vices" -- alcohol and tobacco products
being the most common. But sometimes the "sin" aspect is
defined to include any luxurious indulgence, for example, sleek watches
or cars.
From time to time, we get talk about increasing sin taxes in the
Philippines but nothing ever seems to come out of it. We have some of
the cheapest prices in the world when it comes to tobacco and alcohol.
At a seminar on tobacco use held in Taiwan last year, Professor Ted Chen
reported that an average Indian took 77 minutes of work to afford a pack
of cigarettes. For the average Indonesian, it takes 62 minutes; mainland
Chinese, 56 minutes; Singaporean and the British, 40 minutes; and
American, 20 minutes. I did some quick calculations for the Philippines:
if someone earns 300 pesos a day, he would need to work 36 minutes to
afford 24 pesos for a pack of cigarettes.
In other Asian countries, even the poorer ones, the government does
impose hefty taxes on tobacco products and liquor. A bottle of cheap
Mekong whiskey in Thailand, bought from a street stall, would cost about
100 pesos. A "lapad" [small, flat bottle] of local gin or rum
in Manila would cost less than 20 pesos.
Cheap, too cheap. But for a poor Filipino household, these
"cheap" products can represent a tremendous drain on their
budgets. For example, even in a cheap bar or beer garden, a man who
takes four beers and finishes two packs of cigarettes would be spending
about half a day's wages. That's presuming, of course, that he has a
job... and that he doesn't move on from the drinking to other
hanky-panky.
Economists talk about "price elasticity," the degree to which
a product's price can be raised without losing too many buyers. Mainly
because cigarettes are so addicting, smokers will continue to smoke even
if prices soar. Or, they'll find ways to beat the prices. French smokers
are already talking about how they'll get their cigarettes in Belgium,
where cigarette prices are lower. This has happened in the past when
Canadian smokers bought cigarettes in bulk and cheaper in the United
States.
Filipinos won't have this advantage of border crossings; we'd have to
swim over to, say, Indonesia, for cheaper cigarettes.
Sin taxes are imposed because governments know that entire societies pay
for the consequences of the vices. We're talking here of a long list of
adverse effects. These include the medical costs of treatment for
smokers (as well as "second-hand" smokers or those chronically
exposed to other people's smoke) and alcoholics. Then there are the
social costs of these vices, from the battering of wives by alcoholic
husbands, to the children who are deprived of basic needs because their
parents squander meager earnings on smoking and drinking.
I do get bothered by the idea of sin taxes being imposed on smokers and
drinkers, because in a sense we're penalizing the victims. People don't
just start smoking and drinking because of a whim; they do so because
society says such activities are all right. Advertising in fact promotes
smoking and drinking as chic and classy, and the irony is that the rich,
who can easily afford these vices, are cutting back as they become more
health conscious, while it's the poor who still think it's a sign of
"class" to smoke and drink.
Which is why I think controls need to be imposed on the sources of the
demand for these products, on advertising for example, or on gross
revenues of the tobacco and cigarette manufacturers. The revenues
should, in turn, be allocated for social services, especially for
health. I'm not sure about the exact rate, but in Thailand, a certain
percentage of taxes paid by cigarette and alcohol firms go to a health
non-profit organization, which then uses the money to educate the public
on healthier living.
We need a similar scheme in the Philippines. Besides producing
counter-ads to smoking, drinking and junk foods, revenues from sin taxes
and sin companies could go to supporting smoking cessation programs and
treatment for alcoholics.
A parting thought: 432 pesos for a pack of cigarettes in France works
out to 21.60 pesos a stick. If you can get 20 puffs from a stick, that's
one peso a puff. Well, huff and puff while you can. Many people don't
realize the greatest health risk from cigarettes isn't cancer but
respiratory problems. A peso a puff is nothing compared with what you'd
have to pay in medical costs as you grapple with emphysema and breathing
difficulties.
Sorry for the scare tactics, but, c'est la vie.
|
