Economic cost of alcohol consumption seen at P211B

MANILA – Authorities have reiterated that reforms under the sin tax law are primarily health measures rather than a revenue-targeted move.

Finance undersecretary Karl Chua, in a presentation during the hearing of the Senate Ways and Means Committee Tuesday, said the topmost reason for this proposal is to have funding for the Universal Health Care (UHC) program.

For a five-year period, or from 2020 to 2024, the UHC needs about P1.438-trillion allocation.

Before President Rodrigo Duterte signed in July Republic Act 11346 increasing higher taxes on tobacco products, the UHC had a funding gap of about P426 billion. Under the annual budget program, the allocation is about P1.012 trillion for the five-year period. 

For 2020 alone, the government has proposed a P195-billion funding for the program while the funding gap is about P62 billion.

However, with the signing of RA11346 and the adoption by the House of Representatives of the amended House Bill 1026 increasing taxes on alcohol and electronic cigarettes, the funding gap for the UHC has been reduced to P172.9 billion for the five-year period.

Chua said there is a need for the government to step up the program against the use of sin products because the poor spends more on unhealthy products rather than on healthcare.

Citing data from the Philippine Statistics Authority on the 2015 Family Income and Expenditure Survey, Chua said spending by families belonging to the first to the sixth per capita income decile, or those starting from the lowest income bracket, showed that they spend more on alcohol, tobacco, and sweetened beverages than on medical care.

For one, those from the first decile, which have annual income of about P86,000, they spent an estimated P4.7 billion on unhealthy products, while expenditures on medical care were around P2.6 billion.

Chua said the first eight reasons why they want to increase taxes on sin products are health-related, with the second factor eyed to lessen alcohol-related deaths due to sickness.

He noted the youth die from alcoholic products more than from tobacco.

Without the reforms, he added there are about 31,000 alcohol-related deaths annually based on the Global Burden of Diseases Study in 2017.

With HB 1026, deaths can be lessened to about 25,000 annually on the first year of the measure’s implementation.

Based on the proposed tax hikes by the Department of Finance and the Department of Health, alcohol-related deaths can be slashed by half, or to just around 15,000.

Chua said a 2009 study by J. Rehm, among others, showed that alcohol product consumption’s economic cost on the Philippine economy is about P211 billion by 2020.

“That’s a big amount and that’s the main driver of the cost. Because if you die at 24 (years old) rather than 80 (years old), that means you have a lot of years of lost productivity,” he added. (PNA)


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