WHERE TO, SIN TAXES?

Rey Gamboa
Despite all the grim warnings against raising taxes on tobacco and alcohol products, the
Sin Tax Law since its passage in 2012 has brought substantial and increased revenues to
government coffers, the bulk going to health care and the remaining to tobacco farmers welfare.
True, there may still be some illicit tobacco trade going on, and this subsequently
somehow reduces total tax collections. Fortunately, our government revenue collection agencies
and law enforcers recognize the problem, and are committed to solve this.
Even the warning that high taxes could dampen cigarette and liquor sales significantly,
and thereby negate the expected government collections, has not happened. Demand has
somehow been dampened, but the significant rise in taxes has more than compensated for
dramatically improved collections.
After three years, collections are still rising by double digits. Compared to 2014, revenues
from excise taxes collected on tobacco and alcohol products rose 25 percent to P142 billion in
2015 from P113 billion the previous year.
And surprisingly, the bulk of revenues came from cigarettes, up 32 percent to P100
billion, with fermented liquors contributing14 percent or about P28 billion, distilled spirits and
compounded liquors accounting for P13.5 billion, and wines up P500 million.
SIN TAXES WORK
The World Health Organization (WHO), which has taken a strong interest in introducing
taxation of tobacco and alcohol products in the Philippines as a means towards raising health
revenues since over a decade ago, recently released its own assessment of the Sin Tax Laws
effectiveness.
Within the first year, the WHO said, the government had collected more than P500
million. The amount was divided for health care (85 percent) and displaced tobacco farmers (15
percent), as stipulated in the law.
HEALTH CARE
In 2014, the money was able to provide health care to an additional 14 million families or
roughly 45 million Filipinos, according to the WHO. There was also an 82 percent increase in

enrollment of the population in PhilHealth, which is higher than the 74 percent registered in
2009.
While victims of non-communicable diseases (NCDs) such as strokes and heart diseases
had been the initial target beneficiaries, the law and its implementing rules and regulations do not
specify this. The PhilHealth route was expected to do the work, especially since one out of four
Filipinos is affected by NCDs.
Somewhere along the line, therein arose problems and issues. While the poor who are
enrolled in PhilHealth now have the opportunity to access medication for NCDs, the option to
avail of treatment is still low, at less than 50 percent of those affected.
Health advocates say the new system still needs time to sink in so that those who
formerly shunned treatment because of fear of the cost would be convinced to enroll in
PhilHealth and go to their health center.
HELP FOR TOBACCO FARMERS
Allocation of the incremental 15 percent of the collected sin tax funds should go to
tobacco farmers that are and will be affected by the law. The number has been estimated at about
54,000 families.
In 2014, the amount that should have been allocated for the tobacco farmers was at P15
billion; disbursement of this money continues to be plagued by ambiguities, although there are
general conditions defined in the law and its IRR.
The money is supposed to fund alternative programs for tobacco farmers and workers,
including a shift to the production of other agricultural products or commercial crops, financial
support for those displaced, infrastructure projects like farm-to-market roads, and agro-industrial
projects that will enable them to be involved in the management and subsequent ownership of
projects like post-harvest and secondary processing facilities.
MISAPPROPRIATIONS
Already, there are charges of misappropriations, especially among stakeholders in the
health sector who feel the absence of clear directions on how the collected revenues should be
used has opened the door for unwarranted purchases that are not related to diseases due to
cigarette smoking or excessive liquor indulgence.

Criticism about excessive purchases of drugs from pharmaceutical companies by the

Department of Health to treat heart problems have surfaced, and the money wasted since the
medicines that reach the local health centers are not used.
More than that, radical medical practitioners say that NCDs need to be seen from a
holistic point view, meaning that it needs to be fought at the source. Therefore, more of the funds
should promote healthy lifestyles that will prevent NCDs.
In essence, they said, this is what the Sin Tax Law is all about: raising the prices of
cigarettes and liquor to make it less affordable to those who are gullible enough to indulge on
these health hazards.
With an average of 240 Filipinos dying every day from smoking-related diseases, the sin
tax is regarded as an effective measure to prevent young people and those belonging to lower
economic classes from taking up such deadly habits as smoking and excessive drinking.
CHALLENGES
Definitely, entering its fourth year of implementation, the sin tax law and the
disbursement of the billions of pesos collected from it and allocated to the health sector and
tobacco farming community has to be fine-tuned to make it more relevant to the nation.
The universal health care system has room for much more improvements, and the
principles of health care need to be made more relevant to the needs of the population.
Similarly, more transparency is urged in the disbursement of funds for tobacco farmers so
the money does not end up in the pockets of local government politicians.
Let us not lose this battle in the post-implementation era where the hundreds of billions
of pesos collected from sin taxes are misappropriated by devious corrupt people, or ironically,
even by well-meaning individuals or groups that fall prey to misdirected objectives and hidden
agenda.

ANALYSIS OF THE ESSAY

Essay Theme: The theme of the essay is all about the Sin Tax Law including its function,
benefits, effects, and some relevant issues regarding the law. The author focuses on where
does the money collected from the sin taxes goes? He answers the question Does the
Filipino people really benefit from it? The author intends to tell the reader that it has
been an effective law but then, it needs more improvements so it can cater the needs of
the whole nation.
Essay Structure: This essay follows the traditional way of constructing an essay. It is composed
of the introduction, the body, and the conclusion arranged in the way that the most
important is placed on the top of the article.
Introduction:
The author describes how Sin Tax Law runs for the past three years. He states that
it has been good for everyone and gives some facts about the said law. He gives statistical
proofs of how big the money from sin taxes is.
Body:
The author discusses the two different ways on how the money from the sin taxes
was used. First is the good one then the bad ones. He states that it has been used well for
the health of many Filipino and for the welfare of the tobacco farmers. It gives financial
support for the health of many Filipinos in the manner of PhilHealth. It also provides
those in the low economic classes free health assistance especially for those with noncommunicable diseases. It also supports those tobacco farmers who were affected by the
implementation of the law. It gives financial support to every farmer to help them recover
with the lost in their part.
On the other hand, some of the money just goes down to the pockets of corrupt
officials. DOH buys excessive medicines which were not needed by the local health
centers. Tobacco farmers didnt get their benefits.

Conclusion:
The author ends the essay by recommending improvements for the Sin Tax Law
to be more efficient. He said that there must be transparency with the allocation of funds
and the government must see to it that the people really benefit from it.
Essay Language: The mode of the essay is quite calm and informative. It doesnt impose
anything to the reader, but it wants to impart awareness among the reader about what is
happening with regards to Sin Tax Law.
Essay Type: This essay is a reflective essay because it provokes the readers into thinking of what
is the right thing to do with Sin Tax Law, and the issues concerning it. The essay provides
information and facts about the topic so that the reader can analyze and judge well.

WHERE TO, SIN TAXES?

Why do we sin?
Many would say that it was their last option. Some would say that it feels good to do
something wrong, that it is enjoyable and quite challenging to try what is forbidden. But doing
what is prohibited by the norms and the society makes the world turn against you. Its either they
seize you, or they would do preventive measures to make you surrender. And this is what the
Philippine government has been doing since they passed the Sin Tax Law way back 2012.
In the three years of implementation of the said law, the government has seen its good
effect to the people, and how it was able to raise funds to cater the needs of every Filipino
regarding their health, and even the farmers who were affected by the said law. There is billions
of money collected from the sin taxes, which were intended to be used for its core purpose give
assistance to farmers and health welfare. But the question is, where does it go really?
As what Gamboa has said, raising taxes on cigarettes and alcoholic beverages has
brought increased revenues to government funds, the mass going to health care and the
remaining to tobacco farmers wellbeing. The money collected from the sin taxes are allocated in
the way that 85 % of the collection will be used to provide health care to millions of Filipinos,
and the remaining 15 % should go to tobacco farmers who are affected by the said law.
However, no matter how good this law is, if it will be used to satisfy ones personal
interest, it will be useless. And this is what the present situation is imparting to everyone. There
is a lot of money which can be used in helping those in need, but then, it has taken advantage of
those who are well off.
The demand for cigarette and liquor is still increasing inspite of the fact that the high
taxes elevates its price, causing the governments collection to rise, which somehow caused
anomalities in the disbursement of the sin tax collection. Unnecessary and excessive purchases of
drugs from pharmaceutical companies by Department of Health (DOH) are wasted because it is
not used in local health centers. There are also reports that the money for the tobacco farmers end
up in the pockets of local government politicians.
Sin Tax Law has been running for the past three years affecting not just the lives of every
smoker and drinker, but also the lives of the tobacco farmers. It has manifested a positive and
negative effect in the society. Positive in the way that, it somehow prevents diseases caused by

smoking and drinking, and it actually preserves ones life. Negative in the sense that some of the
politicians has taken advantage of the huge amount of money which was intended for the
peoples use.
To top it all, Sin Tax Law has been beneficial to peoples health and well-being, but then,
there is much more rooms for improvements. This law must cater not just the needs of the
people, but also the transparency in allocating the funds.
Maybe, it is quite fun and challenging to do wrong. But you must accept the reality that
in every wrongdoing, there is a consequence that you must face. There may be people who will
help you get off that way of doing wrong. Smoking and drinking can lead you to death. Sin Tax
Law is just a preventive measure by the government. But the decision is up to you, whether you
stop it, or not. Besides, not drinking and smoking also prevents those filthy hands in commiting a
crime. In such a way, you put a stop to yourself from destroying your body, and you help others
to avoid the temptation of sin. But still, at the end of the day, it is still the people who will
decide, whether they would continue in doing the fun and exciting wrong, or try doing what is
right.