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Sin Tax Bills Pros And Cons Economics Essay

With tobaccos and cigarettes being the major cause of lung cancer death s in the Philippines, advocates are pushing to pass the Sin Tax Bill. Sin tax bill is the tax levied on any products that are notorious to be harmful like cigarettes, alcohol and even activities like gambling. In connection to this, it is said to be effective in reducing behaviour of using such. This thesis paper aims to show the pros and cons of the Sin Tax Bill reforms to the Philippine economy, presented before the Senate and the House. There were three specific sin tax reforms discussed, the Abaya Bill, Recto Bill, and the Santiago Bill. This study accentuates that the approval of the said bill has its great advantages that will help the country’s economy, but its possible disadvantages must not be neglected. Moreover, the ideas written here are not against the bill, but therefore require further analysis and revisions that are deemed helpful to the Philippine Economy.
Introduction According to the World Health Organization in 2009, tobacco is responsible for 12% of male and 6% of female deaths worldwide. The Acting Chief of NCI Tobacco Control Research Brach Chief, Michele Bloch, MD, PhD said that overall around the globe, there are 41% of men that smoke and only 9% for women; also it is estimated that the total number of tobacco-related deaths will rise from 6 million today to 8 million in 2030 (Fromer, 2011). Every day, a person dies from lung cancer in the Philippines. Tobacco or cigarette is the only legal consumer product that kills half of its users when used as directed by the manufacturer. And not only cigarettes, but as well as other socially proscribed goods such as alcoholic beverages, drugs and even soft drinks (in other areas), are considered to be undesirable or harmful, and thus were levied with higher taxes compared to the original by the government – in layman’s term: The Sin Tax.
“Sin tax in modern economic terms, are externality taxes, taxes designed to reduce behaviour which is known to be ‘harmful to society'” (Gifford, 1997. p.1). It is an excise tax on which its objectives is to make consumers lose interest in buying such by imposing taxes on goods that are known to be harmful and lethal such as cigarettes and liquor or activities like gambling (Philippine Daily Inquirer, 2012).
Before, a Tiered Specific Tax system based on suggested retail price (srp) was put in place. Until the late Pres. Corazon Aquino’s administration in 1986, reforms the tax system by changing the specific or unit-based tax to an Ad valorem Scheme, from where the price is based on the manufacturers, for cigarettes. From then on, sin tax bill was revised many times until the year 2004, where the Congress passed Republic Act No. 9334: an act increasing the tax collection; but this is widely considered to be ineffective and a watered-down law. On its implementation in January 2005, under this law, all brands of cigarettes and alcohol products are mandated to an increase in the excise tax rate every two years, up until the year 2011, where there will be specified varying rates of increases (Philippine Daily Inquirer, 2012).
The matter on the issuance of the new sin tax bills proposed by different officials, mainly those of Abaya, Recto and Santiago, has caught many people in between two arguments. The Department of Finance wants the sin tax bill to raise P60 billion to fund the government’s universal healthcare program, especially for the care of public hospital patients with lung diseases. The bill’s obvious benefit on its approval is more health-related, but there are still quite a number of critics against the approval of the said bill. Why? Because there are multiple reasons as to why the sin tax bill reform must not be approved and therefore must be a subject for further and more improved revisions.
Different types of Sin Tax Bills proposed A data from the American Cancer Society and World Lung Foundation says, “Despite the existence of laws that limit smoking, male Filipino smokers are among the top smokers in the world occupying the ninth spot following India and China among others” (Manongdo, ¶1). In accordance to this, many government officials started passing reforms of different kinds that are to change the current sin tax bill implemented. Firstly, the approved Abaya Bill: House Bill 5727, or the Act Restructuring the Excise Tax on Alcohol and Tobacco Products states that there will be equal taxes rates to be charged to any cigarette brands. With this, there will be competition between cigarette companies. Cavite Rep. Joseph Emilio Abaya agreed to amend the sin tax on tobacco products from unitary tax system to two tiers. Under “substitute” bill, there will be two tiers or groups for cigarettes while distilled and fermented liquor will have 3. Tier 1: Cigarette packs priced lower than 11.50php below are meted with a P12 tax on the first year and P24 on the next year; while on Tier 2: Cigarette packs priced 11.50php above are meted with P28.30 on the first year, and P30 on the second year. Indexation or increase will be 8% for every two years, until the year 2025. It has been over 15 years since a sin tax bill made it out of committee meetings in Congress. A landslide vote happened in June, where 210 lawmakers voted to pass the amended House Bill 5727, by Cavite Rep. Abaya. But the bill was watered down, since the bill aims to reduce consumption of tobacco and alcohol, especially among the poor, while raising additional revenues, which will be channeled to the government’s health care program (Balea, 2012). According to Finance Assistance Secretary Teresa Habitan, amended version will only translate to P33 billion from the original plan of P60billion revenue.
Secondly is the Recto Bill by Sen. Ralph Recto. For cigars, the current 2-tiered NRP-based structure shall be retained, but starting March 1, 2013, there shall be an increase to the ad valorem rates by more than 100 percent. Pursuant to Cathy Yamsuan’s report in the Philippine Daily Inquirer 2012, there will be an increase of 121 percent to hand-packed cigarettes taxes from P2.72 to P6 per pack beginning March 1, 2013, particularly in low-priced cigarettes. While mid-priced cigarettes, a 32% rise from P7.56 to a P10 tax; and high-priced cigarettes, a 17% increase from P12 to P14 tax per pack. Recto, however, presented a committee report that would raise only between P15 billion and P20 billion in additional sin taxes.
Lastly is Sen. Miriam Santiago’s proposed reform.
“Santiago said that under her bill, 85 percent of the P60 billion would be used for the government health program while the remaining 15 percent for safety nets that would ensure that tobacco farmers can shift to more lucrative crops like vegetables that have a bigger market than tobacco” (Yamsuan, 2012, ¶12).
No more further discussions needed to Santiago’s Bill because Juan Ponce Enrile, the current Philippine Senate President, noted that the Santiago bill is “almost similar to the government’s original position. Sen. Miriam Defensor-Santiago’s version of the Sin Tax Bill or the Senate Bill 3249 espouses a single tier excise tax scheme for cigarettes. The version reported out by Recto’s Ways and Means Committee pushes a multi-tier scheme, while the House-approved bill is a two-tier system.
Advantages There are a lot to mention when we look in-depth to the possible benefits, the country may be subjected to, that will be a great help to the society. Here, there are three main points that are most likely to be emphasized. First are the sin tax bills’ health-related purposes and benefits. Since the real reason behind the implementation of this law is to discourage the people, especially the youth to smoke cigarettes and indulge themselves to other vices, Department of Health (DOH) said that sin tax bill is a ‘health bill’. If this is approved, many Filipino lives will be saved if this law is effective enough after its implementation. As stated by The National Youth Commission (NYC), the number of young smokers in the country had increased. “Two of five Filipinos aged 13 to 15 years old consumed tobacco last year. The increase in cigarette prices may thus limit the number of young smokers” (Garcia, 2012, ¶15). On the other hand when the Laylo Research Strategies made a poll survey on how will Filipino smokers react if there is an increase in sin taxes, the survey results confirms what the advocates have been saying higher tobacco taxes would accomplish: discourage consumption and therefore reduce the number of Filipinos who either develop diseases or die from smoking. “The Southeast Asia Initiative on Tobacco Tax says higher “sin taxes” can help save 140,000 to 1.3 million Filipinos. With the pending Sin Tax bill likely to affect cigarette prices, 31% of the regular smokers said they will slowly stop smoking, while 17% will stop immediately” (Rappler. 2012 ¶2

Role of carbon credits and carbon footprints in the Middle East

Introduction Many organizations across the world have improved efforts geared towards ensuring social responsibility and business ethics are followed when undertaking organizational activities. Consumers are now aware of the ethical and social responsibility which business organizations have towards society. Due to the effects of environmental destruction, consumers are inclined to associate themselves with firms which manufacture products while following environmental conservation criteria. Recently, adverse effects of environmental destruction such as climate change and global warming has increased demand for green products or firms which observe environmental regulations. In the Middle East and especially the UAE, there is a demand for products which conserve energy and which are reusable or can be recycled (Anderson et. al., 2006). This explains the increased demand in the UAE for products such as hybrid cars, green building materials, recyclable bags and others.
Carbon footprints and credits are two common forms of measuring the impacts which organizations have on the environment. Carbon footprints are emissions of greenhouse gases which are attributed to a product or an organization (Wiedmann