Who is the biggest loser?

Today, about 240 families lost a loved one to a tobacco-related illness. That’s an estimated 87,600 deaths in a year. In 2011, the country earned around Php26 billion worth of taxes from the tobacco industry, while revenue from cigarette manufacturers amounted to approximately Php31 billion.

How much does life cost? For each life lost to tobacco use, the tobacco industry earned Php353,881.28. Is it worth it?

This does not even account for the annual health costs and productivity losses from tobacco-related deaths and diseases that range from Php148 billion to Php314 billion. No monetary equivalent can also be juxtaposed to the hours of painful treatment just to manage the diseases, nor the time and energy a family member spends to care for the loved one. More so, these numbers do not even reflect the pain of losing someone you love.

But for decision-makers, these exact figures and immeasurable realities are not compelling enough to pass the necessary measures to reduce tobacco use. Instead, the most marginalized and the poorest sectors are pitted against each other to rationalize inaction - tobacco victims versus farmers, workers against children and youth.

Life versus livelihood.
The battle of the sectors has been the easiest tactic to muddle the discourse on amendments to excise taxation. What we fail to remember is that all of these sectors - farmers, urban poor, youth, children, and workers are the tobacco victims. They are the ones selling their produce at a lower cost because of the monopoly, the ones earning below minimum wage or, worse, hired contractually, and they are also the primary consumers-replacement smokers-turned-patients a few years after being addicted to smoking. They are the same people continuously getting trapped in the vicious poverty cycle of having less education, lower income, poorer health, and greater out-of-pocket health spending.

The industry attests that it provides livelihood to an estimated 3 million Filipinos (3% of the total population), including their dependents, from farmers to factory workers to sari-sari store vendors and takatak boys. True, the industry provides jobs, but what kind of jobs and at what expense?

A recent Xinhua wire report written by Prime Sarmiento details the earnings of Bernadette Guya, a 39-year old tobacco farmer in La Union. According to the article, Guya sold her produce for a one-hectare leased plot at Php50,000 in the cropping season that ended in May 2011 and netted only Php20,000, barely covering expenses for her children’s education and food.

Meanwhile, compensation for workers of the tobacco manufacturing sector has been declining over the past two decades. From 1991 to 2010, compensation per employee in real terms have declined by 41% according to the data of the Bureau of Labor and Employment Statistics (BLES). Contractualization schemes in the industry has also been on an upward trend.

Majority of the farmers and workers are low-income earners. As a result, most of them are also those that belong to the poorest households, which have poor sanitation facilities, access to clean air and water, and access to healthy food. These living conditions make the poor most vulnerable to illnesses and high out-of-pocket health expenditures, which in turn, push them further down the income pyramid.

A recent paper released by the Philippine Institute for Development Studies (PIDS) in January of this year, which was written by Valerie Ulep et al., shows that the sectors supposedly benefiting from the tobacco industry are also the primary consumers of the product. According to the study, 40% of the poorest population are current smokers compared to 25% of the richest population. Inasmuch as the bulk of the population belong to the poorest households, we can easily deduce that a significant part of the cigarette market is poor.

Target the Poor, Earn from the Poor.
Its simple logic, if you want the biggest profit, target the bulk of the market. In a country of almost 100 million where majority are poor and the culture is tingi (per stick sales), small change put together produce the largest profit share (approximately 60% of tobacco sales are from tingi), and for industries such as tobacco and alcohol there is no such thing as small change.

Poor Filipino families allot at least 2 percent of their resources to sin products (i.e. tobacco and alcohol) (FIES). Even the the country’s foremost poverty alleviation program, the conditional cash transfer program, Pantawid Pamilyang Pilipino Program (4Ps) was no exeption, as reports show that sales of tobacco and alcohol increase during the release of subsidies.

The lure of nicotine is too hard to pass especially for those already addicted. But for the poorest and most marginalized sectors, price is a deciding factor. Research shows that for the poor, children and youth sectors, increasing the per stick price of cigarettes to at least Php5 will compel majority, if not all, of them to say no.

Holding sin products accountable.
For Php2 per stick, cigarettes are cheap products with high costs. Excise taxation is the most effective intervention in controlling and curtailing negative behavior.

House Bill 5727 proposed by Jun Abaya, introduces phases of preventive measures that gradually ease out and prevent the poorest and most marginalized sectors - children, youth, farmers, workers, and the poor from using tobacco. This bill aims to gradually strengthen the tax structure, and yet with immediate results - decrease in consumption and increase in government revenue.

The proposal of the Abaya bill to use the earnings to benefit the affected sectors employed by the tobacco industry, and to fund the universal health care - health insurance for 5 million indigent families and enhancement of public health services and facilities - is a landmark legislative measure for accountability. An eye for an eye. Make the tobacco industry pay for its negative impact.

These numbers do not even reflect the deaths and illnesses due to alcohol use. Deaths due to drunk driving - road accidents are the fourth primary cause of death in the country; add to that liver problems and violence. Even without the WTO ruling, the compounded social and health costs of tobacco and alcohol use should be reason enough for the Lower House to pass the amendments.

If reforms are made, the tone is set that in the Philippines, the government is about the people. However, the longer it takes to pass the amendments, the higher the losses for all sectors, for all Filipinos.

But the Filipino people can win this time, if we compel our representatives to vote for health and the best interest of the Filipino people. If we fail, we will be the biggest loser.

Tobacco victims, please stand up.#

May-i L. Fabros is Coordinator of the Young Women Collective of WomanHealth Philippines. Jo-Ann J. Latuja is a fellow of Action for Economic Reforms.

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Who is the biggest loser?
Today, about 240 families lost a loved one to a tobacco-related illness. The country earns # from the tobacco industry. Annual revenue from tobacco industries divided by annual estimation of deaths = value of a life. Is it worth it?

But for legislators these deaths/numbers (even with the loss of revenue from the health costs and productivity losses) are not compelling enough to pass the necessary measures to reduce tobacco use.
Instead the most marginalized and the poorest sectors are pitted against each other to rationalize inaction - tobacco victims versus farmers, workers against children and youth.

Life versus livelihood.
The battle of the sectors has been the easiest tactic to muddle the discourse on amendments to excise taxation.
The NSCB cites the most marginalized and poorest sectors of society – farmers, urban poor, women, youth and children, workers. But data shows otherwise,
Which sectors comprise the lowest wealth quintile?
A farmer and a factor worker earns
These numbers do not even reflect the deaths due to alcohol use. Deaths due to drunk driving and liver problems.
WTO ruling.
Sino ang dependent sa healthcare?
Foresight

Triple burden. Workforce of the industry. Consumer. Health cost.
You work in the industry. You buy their product. You end up in debt with the cost of health care.

So it should not be a competition as to which sector is most affected, all the sectors being pitted against each other – children, youth, workers, farmers, and women are the poorest and most marginalized. The data shows that these sectors are the part of production, manufacturing if you look at the demographic

With scarce resources, everyone is scrambling for a piece of the pie. But with the advent of the debate on sin taxes, its ending up as one sector against another.

The question is who is pitting the sector against the other. Nevermind Who the fight director is, the focus should be on why there is even sin taxes.

What is excise tax
Controlling, curtailing negative behavior

Money makes the world go around, and people’s behavior because of prices shows how sensitive particular secotrs are to price increases

Excise taxation is a targeted intervention since there are only specific sectors who will be most responsive to it.

Excise taxes as an accountability mechanism
There is no debate as to the danger cigarette use has on the smoker and the non-smokers, so logically a product that causes harm should not be accessible to the market, but years of intense lobbying and market forces prevented cigarettes from being banned. Given the accessibility of tobacco products, the negative impact can be responded to accordingly by the accused party – accountability mechanism

Health for all
Barely enough resources for health.

Universal vs targeted services – health care for all
No division and competition among sectors since everyone has a right to decent and quality health care.

There should be no competition as to who is most affected by tobacco products. Everyone is negatively affected by tobacco products so more resources should be provided for all since everyone is affected by it – no disaggregtion based on gender, age, status.

In the war for sin tax reform, seemingly only the tobacco industry wins, because the longer it takes to pass the amendments, the higher the losses for all these sectors, for all of us.

But the Filipino people should win this time. Legacy bill. But if this is passed. We set the tone that in the Philippines, the government is about the people.

Triple burden. Workforce of the industry. Consumer. Health cost.
You work in the industry. You buy their product. You end up in debt with the cost of health care.