Let's talk about the nationwide liquor and cigarette bans in the Philippines. Though not banned by a presidential decree LGUs across the nation have issued the bans and continue to uphold them. Department of Finance secretary Dominguez says this is a good thing because restricting access to these products will prevent people from contracting COVID-19.
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| https://business.inquirer.net/295869/dominguez-liquor-cigarette-restrictions-to-stay-as-health-top-priority-amid-covid-19-pandemic |
The government will keep the restrictions on liquor sale as well as withdrawals of cigarettes from factories for the rest of the extended lockdown period, as keeping Filipinos away from these “sin” products would not only keep them healthy but also protect them from getting inflicted with COVID-19, Finance Secretary Carlos G. Dominguez III said Monday.
As such, the liquor ban imposed by the national and local governments will stay in areas under enhanced community quarantine, while domestic cigarette production will remain on halt, save for a few lines churning out for exports.
Over the weekend, the Department of Finance (DOF) reported a slump in the year-to-date tax take from tobacco and alcohol, which the agency described as “consistent large excise tax collection drawers.”
During the period Jan. 1 to April 15, tobacco excise taxes fell 42.5 percent year-on-year to P33.19 billion, while collections from alcoholic drinks declined 26 percent to P17.85 billion.
This drop happened despite the higher tax rates slapped on these products since Jan. 1 under Republic Act No. 11346 which increased the levy on cigarettes, and RA 11467 jacking up taxes on alcohol, heated tobacco and vapes.
As tax collections dropped, the government increasingly turned to foreign loans from multilateral lenders and bilateral government partners to ensure that it can address the health and socioeconomic fallout from COVID-19.
Asked if the government may consider easing ECQ restrictions on these “sin” products to shore up badly needed government revenues to be spent for COVID-19 response, Dominguez replied: “No.”
Further asked if he referred to both products, the Finance chief replied: “Yes.”
“Sin taxes are imposed to discourage consumption of products that are detrimental to health. We do not wish to exacerbate the current health crisis,” Dominguez explained.
Last week, Dominguez said that he did not want the liquor bans lifted, but the government may exempt cigarettes from quarantine restrictions as smuggling of so-called “illicit” sticks increased after unscrupulous traders took advantage of dwindling supply of tax-paid packs.
Dominguez’s change of heart with regards to cigarettes came after a meeting with Health Secretary Francisco Duque III, who had advised that smoking may aggravate a respiratory ailment like COVID-19.
The fight against illicit cigarettes will be nonetheless continued by the so-called “strike team” of the bureaus of Internal Revenue (BIR) and of Customs (BOC), Dominguez said, adding that the country’s two biggest tax-collection agencies remained “vigilant” against such illegal activities.
The Center for Alcohol Research and Development (Card) Foundation Inc., whose members included Absolut Distillers Inc., Emperador Distillers Inc. and Ginebra San Miguel Inc., earlier appealed to totally lift the ban or relax it on certain hours during which stores may sell liquor.
“If this ban continues, the industry can no longer survive; a situation that can affect a large sector of the community… the alcohol beverage industry bears already the agony of declining market demand due to the imposition of high excise taxes on alcohol,” Card said in an April 16 letter to Trade Secretary Ramon Lopez.
“Post-enhanced community quarantine, the tobacco industry projects that there will be a resurgence of illicit trade. The enhanced community quarantine resulted in job losses and a decline in incomes, which favor the consumption of low-priced and tax-unpaid illicit products,” industry players warned.
Also, they sought to “allow the resumption of the production of exciseable products such as tobacco and alcohol so that excise taxes and value-added tax (VAT) may be generated by government to fund social welfare programs and for consumers not to turn to illicit products.”The consequences of banning booze and smokes are far-reaching and could potentially be devastating for the tobacco and liquor industries as well as government programs like universal healthcare which are dependent upon the taxes levied on those industries. Contrary to what Dominguez said sin taxes are not imposed to discourage consumption. They are imposed by governments to fill their coffers and fund programs. Just last year the DOF warned that the Congress' slowness to enact a sin tax law would make the universal healthcare law unimplementable.
Chua said excise taxes on sin products such as cigarettes and alcoholic drinks need to be increased to levels that would help fill the P62-billion funding shortfall in the first year of implementation alone of the UHC program in 2020.
If Congress fails to pass a law mandating these sin tax increases, then the UHC program will be an ineffective tool in achieving the Duterte administration’s goal of ensuring equitable access to quality and affordable health care services for all Filipinos.
https://www.dof.gov.ph/non-passage-of-new-sin-taxes-to-make-uhc-a-third-class-law/Last year Dominguez and DOH Secretary Duque urged the Congress to act quickly on this matter.
In a joint statement, DOH Secretary Francisco Duque III and DOF Secretary Carlos Dominguez III said that raising the taxes would “close a cumulative funding gap estimated at around P426 billion over the next five years for the full and proper implementation of the Universal Health Care (UHC) program.”
https://www.philstar.com/headlines/2019/05/26/1920969/doh-dof-make-final-push-higher-sin-taxesNow with the ban this revenue stream is dead. That means no funds for the DOH at a time when they need it most of all. The continuing ban is also putting the liquor industry at risk of going under. What business can sustain a 100% loss of profits for two months and possibly more? If the liquor and tobacco industries collapse then the government will have lost an important source of revenue. What becomes of universal healthcare then?
Furthermore the tobacco ban has led to an increase in the illegal cigarette trade which will continue even once the ban is lifted. No one is working so they can't afford more expensive brands thus causing them to buy cheaper illegal smokes.
Why have these bans? What is the point? To stop the spread of COVID-19? Only a few countries have banned liquor during the pandemic. India, South Africa, Thailand, the Philippines, Greenland, Barbados, Grenada, Colombia, Mexico, and Zimbabwe have all banned liquor sales. Meanwhile places like the USA and Canada have classified liquor stores and marijuana shops as essential services.
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| https://www.thestar.com/news/2020/03/27/why-are-cannabis-and-liquor-stores-considered-essential-services-during-the-covid-19-outbreak.html |
On Monday, the Government of Ontario released its list of essential workplaces that can continue to operate during the COVID-19 outbreak. The list included liquor stores, alcohol producers, wholesale stores that sell beer and wine to providers as well as cannabis stores and producers.
It’s a move that is being praised by public health and substance-use disorder experts, who say it could help prevent social unrest from breaking out and even save lives.
A person who is in alcohol withdrawal can experience delirium, epilepsy and death, says Larry Grupp, an associate professor at the University of Toronto and an expert in the neurobiology of alcoholism.
“If you’re a real alcoholic, then you’re going to have epilepsy, and (if) you’re going into withdrawal because you don’t have access to alcohol, you could die,” Grupp said, noting that it’s a small section of the population who is that heavily addicted to alcohol.
“I think they’re just trying to avoid anymore kind of social unrest on top of the (COVID-19) problems,” he said, adding that he supports keeping liquor stores open.
Leslie Buckley, chief of addictions at the Centre of Addiction and Mental Health, said she and her colleagues were monitoring the announcement closely and were worried liquor stores could be closed.
The concern was that people who are severely addicted to alcohol would experience negative health outcomes and may turn to more harmful forms of alcohol, such as rubbing alcohol or mouthwash.
“That was definitely on our list of concerns … depending on which one they’re using, it can cause incredible harms,” Buckley said. “Sometimes I have people who drink gasoline.”
Perhaps the government needs to find a better way to pay for their programs than sin taxes. That could be part of the new normal the government is so keen on imposing.
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