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.

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