SEN. Ralph Recto finds the assumption of the Department of the Finance (DOF) that smokers of low priced cigarettes will shift to expensive cigarettes once high tax rates are imposed, as absurd, defies
common sense and may lead to revenue loss.

Recto during the lengthy interpellation on Tuesday afternoon noted that the notion of DOF, which was used as basis in crafting the substitute sin tax reform bill, is improbable as he maintained that his proposed rates are moderate and responsible.

Recto said it is completely absurd for the Finance department to base its revenue projection on the notion that smokers would “upgrade” instead of “downgrade” once taxes on tobacco are raised.

Recto was referring to the revenue projection of the DOF submitted to the Senate wherein it expects the huge portion of the additional P40-billion revenue from tobacco and alcohol products will come from the premium cigarettes.

According to Recto, 2011 production of low-priced cigarettes is at 2.97 billion packs or 64 percent market share; mid-priced cigarettes is at 451 million packs or 10 percent of the market; the high-priced is at 1.1 billion packs or 25 percent share while premium brands has zero.

“Premium tier is a phantom tier. No volume. Zero market share,” he added.

But under the sin tax bill of Sen. Franklin Drilon, the DOF assumed that this phantom tier would, all of the sudden generate sales of 955 million packs and enable the government to collect additional revenues amounting to P27 billion.

 “That is why I am saying it is a leap of faith. We are not collecting revenues from the premium brands today and then, suddenly, presto, we will collect P27 billion more under the premium category,” Recto added.

Recto was the one who authored the original committee report on sin tax reform bill, which set the projected additional revenue from sin product to P15 to P20 billion on the first year of implementation.

His version was rejected by the executive department, prompting Recto to resign as chair of the Senate ways and means committee and was eventually replaced by Drilon who then introduced a substitute bill.

Drilon’s bill provides for tax hikes of 341 percent in the first year for locally produced cigarettes, with a steady increase reaching 1,076 percent on the fourth year of its implementation.

Health concerns
A growing number of lung-related ailments stemming from cigarette smoking in the country have prompted medical practitioners to call public support for the “sin tax bill’’ and to withdraw their endorsement on government officials who are pro-health and pro-poor advocates.

At a forum in Quezon City yesterday, the lung experts of the Philippine College of Chest Physicians (PCCP) demanded the senators to immediately pass the most appropriate sin tax bill imposing higher taxes on cigarettes and other tobacco products that will decrease sales and subsequently lower the incidence of lung-related diseases and deaths from first-hand, second-hand and third-hand smoking.

First-hand smoke comes from individuals who smoke cigarettes while second-hand smoke is inhaled by individuals who don’t smoke but are near cigarette smokers.

Third-hand smoke refers to the particulates that stick to materials like tables, clothes and curtains and can easily be transferred through touching.

In a study conducted by Dr. Luisito Idolor, records showed that there is a 20 percent prevalence of Chronic Obstructive Pulmonary Disease (COPD) in the provinces, much higher than Metro Manila’s.

As the PCCP supports the “World COPD Day’’ yesterday, Idolor said that the disease can be cured and “it is not too late’’ to take actions to improve respiratory health.

In Nueva Ecija, Idolor noted that 35 percent or roughly 1/3 of the population in the province are cigarette smokers.

Health Undersecretary Ted Herbosa, who used to be connected with the Philippine General Hospital (PGH) for 12 years, said that most of the patients admitted in the hospital have difficulty breathing due to cigarette smoking.

He said that lawmakers should be more focused on the safety and health concerns of the public rather than the predicament of the tobacco farmers who would be affected by the imposition of higher taxes for tobacco products.

While declaring Senator Ralph Recto as anti-health and anti-poor, the group of doctors posted the photos of Senators Drilon, Kiko Pangilinan, Koko Pimentel, Manuel Villar, Miriam Santiago, Pia Cayetano, Allan Peter Cayetano, Serge Osmena, Teofisto Guingona Jr., Edgardo Angara and Panfilo Lacson whom they described as health advocates.

Under the three versions of the Bill, Recto’s proposal calls for the imposition of a 65 percent tax increase in cigarettes compared to the 225 percent and 267 percent increase in the versions of Drilon and Santiago, respectively.

With Recto’s version one pack of cigarette will increase by P9.15 while Drilon’s and Santiago ’s version calls for the increase of P18 and P20.34 per pack of cigarette respectively.