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PHILIPPINES: Gov’t Smokes Out Tobacco Industry with Higher Taxes

Marwaan Macan-Markar

BANGKOK, Aug 10 2010 (IPS) - Tobacco multinational Philip Morris may have had good reason to send out victory smoke signals when Filipinos elected Benigno Aquino III to be president in May. After all, he is a regular smoker who has said he will not quit the habit.

But the strong tobacco industry lobby in one of the region’s most lucrative cigarette markets received a sharp reminder in August that Aquino’s penchant for a puff “when under stress” will not come in the way of the Philippines’ joining the global trend to discourage the smoking habit.

Newly appointed Health Secretary Enrique Ona assured local anti-tobacco groups that the health department would be pushing for higher tobacco taxes, raising hopes for a tougher policy in a country of 94 million people that has among the lowest taxes and retail prices for tobacco products in South-east Asia.

Indeed, Ona’s statement was an unprecedented one from an arm of the government that had often hinted that ‘sin taxes’ – which includes taxes on tobacco and liquor – were the province of the finance department, say public health experts.

“We are banking on Secretary Ona’s proposal to increase cigarette taxes by (0.10 U.S. cents) per stick or an equivalent of 4.50 Philippines pesos per stick,” said Maricar Limpin, executive director of the Philippine chapter of the Framework Convention on Tobacco Control Alliance (FCTCA), a global network of anti-tobacco activists.

“Tobacco tax increases will result in higher prices of cigarettes and will help reduce smoking prevalence especially among the youth and the poor,” added Limpin in a statement after the recent meeting her group held with Ona.

Taxes on tobacco products in the Philippines stand at just 14 percent, in contrast to 69 percent in the affluent city-state of Singapore and 70 percent in Thailand, the highest in the region.

Thus, while a packet of the original Marlboro, a product of Philip Morris International (PMI), sells for 8.70 U.S. dollars in Singapore and 2.50 dollars in Thailand, the same packet of Marlboro ‘Reds’ goes for just 0.70 cents in the Philippines.

This is cheaper than in Indonesia, where the same packet of 20 cigarettes sells for one dollar, or Laos, where it sells for 1.73 dollars.

Cheap cigarette prices have long kept the Philippines in the list of the top 15 cigarette-consuming countries in the world. One report estimated that 84 billion cigarettes are smoked every day in the country.

Vietnam and Indonesia are the only other two countries from the region on that list, with Indonesia having the highest number of cigarette smokers at some 63 million people – or 40 percent of South-east Asia’s 125 million smokers.

An estimated 28.3 percent of Filipinos above 15 years old – more than 24.6 million people – smoke, according to non- governmental groups like Health Justice. A Global Youth Tobacco Survey in 2007 estimated that children as young as 13 are among the country’s smokers, contributing to the four million youth between 13 and 15 years addicted to cigarettes.

“Our smoking prevalence is very high and it has contributed to many smoking-related deaths,” Deborah Sy, executive director of Health Justice, said during a telephone interview from Manila. “We estimate that 10 Filipinos die every hour from tobacco-related diseases.”

These deaths are among the five million people around the world who die every year from tobacco-related diseases, such as lung cancer, heart attacks, stroke and chronic obstructive lung diseases, according to the World Health Organisation.

Such grim details, however, may not mean easy passage of a new ‘sin tax’ law by the Philippine Congress. “This expression of intent could spur the Congress into action, given that a 2004 law for measured tax increases ends by 2011,” said Sy. “But it will have to go a long way before becoming true policy.”

Aggressive campaigns by the tobacco industry to capitalise on a relatively freer market to push cigarettes – unlike Thailand, Singapore and Malaysia – pose another challenge.

“The tobacco industry has started targeting female smokers in the Philippines and youth to increase their sales,” said Joy Alampay, spokeswoman for the South-east Asia Tobacco Control Alliance, a regional anti-smoking lobby. “They have introduced new flavours to entice new smokers.”

Such a “feminine touch”, as Alampay describes it, includes packets that offer chocolate- and mint-flavoured cigarettes, and those that come in pastel shades or with floral patterns.

For its part, the tobacco industry has pointed out that it helps keep the Philippine economy humming through the jobs it provides to thousands of farmers in the north of the country, where tobacco is grown.

And when it matters, PMI – whose Philippine arm in February combined with local Fortune Tobacco Corp to form a new company that is expected to control 90 percent of the cigarette market, has demonstrated how high its influence goes in the country’s political hierarchy.

No less than former President Gloria Macapagal Arroyo inaugurated PMI’s 1.6 billion peso (35.6 million dollar) factory in Batangas province in 2003, says the website of the Manila-based ‘ABS-CBN News’. “She lauded it for being a testament of investor confidence in her administration.”