Skip to main content

TOBACCO TAXES: THE NEED FOR AN EXTENSIVE BENEFIT COST ANALYSIS

In the Philippines, a senator recently questioned the wisdom behind the existing tax rates being imposed on cigarettes. According to the legislator, the taxes being collected by the government (PhP26 Billion) is far less than the amount being spent (PhP 47 Billion) on tobacco related ailments.

Looking at the matter a bit further, what benefits and costs can actually be connected with cigarettes? The benefit side includes: Taxes, income being made by advertisers (cigarette advertisements are not outlawed in that country), business for various suppliers and service providers (like trucking companies), livelihood for the companies' employees and tobacco farmers, etc.

Despite the seemingly numerous benefits brought by the presence of the tobacco industry, as enumerated above, the costs are far greater. The serious tobacco related ailments can be transferred to offsprings and at this point, there is still no definite cure to it.

The senator is therefore correct when he advocated the imposition of heavier taxes on cigarettes. It doesn't matter if it is the manufacturer or the smoker who will be more heavily penalized for as long as cigarettes be made to pay for all the government and societal costs associated with it. Besides, there can be no greater deterrent to smoking withdrawal than high prices.

However, the government should be careful in determining the level of taxes to be imposed on cigarettes. Imposing too high a tax on tobacco might encourage widespread smuggling and that will effectively undermine the government's program. The major question that will arise will therefore be, how much should the government impose on tobacco products?

Comments

Popular posts from this blog

US PRESIDENTIAL CONVOYS

A columnist for a Philippine newspaper talks about the costs and massive preparations required by the US Secret Service whenever President Bush and other (US Presidents) travel outside of Washington DC. I remember watching a CNN report that showed how big a US presidential convoy is, compared to the two vehicle transport being used by Prime Minister Tony Blair of the UK.

DOHA Round Updates & Preferential Tariffs in Practice

T he DOHA round of the World Trade Organization (WTO) negotiations intends to promote the opening of markets and promoting free trade. This April, the latest meeting failed to reach a conclusion. Director-General Pascal Lamy of the World Trade Organization delivered a speech before the US Chamber of Commerce on April 23, 2007. Here are excerpts from his speech. "T oday we know that the Doha Development Round will not be concluded until and unless all these participants are ready to walk the extra mile and table additional contributions to the collective success of this multilateral enterprise. It is clear that the contributions will be linked to the degree of development and wealth of each participant, with the world poorest countries making the smallest contribution. It is also clear that no one will be asked to move first: countries will have to move in concert, like a big orchestra playing to the same tune. For the moment, a group of major actors — the EU, US, Brazil, India — d

Competitive Advantage of the Philippines II

Despite being a newcomer in the global BPO industry, the Philippines have steadily increased its foothold as a top outsourcing destination. Rest of Asia ready to grab BPO jobs from India, RP--study INQ7.net, Agence France-Presse Last updated 08:44pm (Mla time) 11/05/2006 THE PHILIPPINES and India have to boost their overall competitiveness, as Asian countries gear up to get their share of the global offshore outsourcing pie, a recent global study showed. These top two outsourcing destinations will eventually compete with China, and other Asia Pacific countries that have similarly positioned themselves as outsourcing destinations, the latest Offshore City Competitiveness Report of market research firm neoIT showed. The study noted that companies have "moved beyond India" and the Philippines into not so well-known cities in the world since companies want to create a "global footprint." China and Eastern European countries are starting