Tax on Cigarettes Cigarette smoking which is the main cause of cardiovascular and respiratory diseases (Centers for Disease

Control and Prevention [CDCP], 2009) has been taking six million lives yearly (World Health Organization [WHO], 2011). About 80% of smokers reside in developing countries (WHO, 2011) which indicate that higher rate of smoking-related diseases are experienced in these countries. Different interventions were done to minimize the growing rate of smoking population which one of these are imposition of higher tax on tobacco products. Nowadays, several revisions in tax schemes on cigarettes in different countries are made on the sole purpose of lowering smoking-related diseases. In the Philippines, the controversial Sin Tax Law, addition of 33% tax on cigarette and alcohol, intends to increase smoking cessation and profits for the public health (Official Gazette, 2012). Though with the overwhelming support it received in the Senate and in the House of Representatives that it was successfully made a law, different organizations and non-government organization oppose its real effect to the country This study aims to evaluate the positive and negative effects of higher taxation on cigarettes. Higher taxation on cigarettes has positive effects to the society. One is that the increase on the value of cigarettes would excise the rate of cigarette usage and number of smokers (Farrelly, M., Nonnemaker, J. & Watson K., 2012). Smoking cessation can drastically diminish the number of cigarette-related illnesses (CDCP, 2009). Chaloupka, F. (2007) also noted that higher taxation on cigarettes results to the decline on the mortality rate associated to cigarette-use

diseases. With this, the relationship on the decrease in smoking related diseases and the increase in smoking cessation is established. Subsequently, higher taxation on cigarettes results in the increase in smoking cessation. According to Chen, S., Hwang, T., Lee, J. & Ye, C. (2004) in their investigation conducted concerning the effect of cigarette price increase on the cigarette of consumption in Taiwan initiates the inclination of the increase in the cost of cigarettes in decreasing cigarette expenditure. cigarette price elasticity was less than one, meaning that in addition to reducing cigarette consumption, an additional tax would also generate additional tax revenues. Continuing price increases should reduce cigarette consumption significantly. Provided that the tax increases are proportionately larger than the resulting reduction in cigarette consumption, cigarette tax revenues will increase and can be used to reduce current National Health Insurance deficits and possibly reduce the damage and death caused by smoking related diseases. (para. 24) Mainly, the study showed that added tax on cigarettes, 13.27/packs/person results in 10.5% decrease in cigarette usage. (Chen, S., et al., 2004) In addition, other consequences of the addition on cigarette tax are deterrence from setback in smoking (WHO, 2011) and the improvement on the state of well being of previous smokers (Chaloupka, F., 2007). Higher tax on cigarettes allots more revenue for public health. By considering its positive effects, this would allow the government to broaden the scope of tobacco regulation while having the possibility of forsaking the country's economy on the other hand. Moreover, the industry would not be able to influence the government to lax its hold on tobacco regulation because of the government's firm stand for more revenue in public health. While clearly drawing the line between the industry and the government's interests, higher taxation on cigarettes would also decrease smoking-related crimes such as illegal importing or exporting of

cigarettes, cost fixing, and selling cigarettes to minors (Branston, R., Gilmore, A. & Sweanor, D., 2010). Higher taxation on cigarettes also has negative effects. First is that it deprives lowincome smokers of their cheap vice. "Low-income smokers face a greater financial burden as a result of higher cigarette excise taxes than higher income smokers.," says Farrelly, M., et al. (2012). He adds that although the smoking population is greatest in the lowest class of the society, they are the ones most affected in the changes on cigarette tax. They allot most part of their income in buying cigarettes compared to those in the higher class of the society. Besides, according to Remler D. (2004), that the basis for increasing the tax on cigarettes is not deemed on different income class but on horizontal equity, the purposeful consideration that all of the population has all equal financial means and so as in different aspects. He stresses that: Even if one accepts the idea that a higher cigarette tax is beneficial overall to poor individuals who quit smoking, it is a burden on those who do not quit. Consider the issue of a cigarette tax increase and how 3 kinds of smokers are affected. Smoker A responds by quitting, eliminating the financial burden of cigarette taxes. Smoker B continues to smoke the same amount and thus is hurt financially. Smoker C cuts back just enough so that he or she spends the same amount on cigarette taxes. (para. 33) The increase in cigarette tax is exploited by tobacco commercial entrepreneurs to conceal added value on cigarettes to generate higher income. Current accounts demonstrate that even the rate of expenditure in cigarette decreases due to price increase of cigarettes; it is still favorable for the cigarette manufacturer. This is the reason that United Kingdom, even considered as one of the countries with utmost tax on cigarettes, is still preferred by investors. Likewise, added tax on cigarettes empowers large tobacco entrepreneurs to monopolize the

market and eliminate minor companies even with their more affordable products (Branston, R., et al., 2010). Positive and negative effects of higher taxation on cigarettes are discussed in this research study. The researcher observed that additional tax lowers diseases and death rates caused by smoking, increase in smoking cessation, increase in revenue for public health, and the decrease in smoking-related crimes. While this brings positive effect in our society it also has its negative effects. One is the way it deprives low-income smokers of their cheap vice and the other one is the concealment of the generation of higher income by tobacco commercial entrepreneurs. It is important to emphasize that the positive effects mentioned earlier in this study can only be achieved with proper collection and allocation of tax. Additional studies in efficient ways in tax collection should be done to further observe the efficacy of higher cigarette taxation.

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