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A CASE STUDY ON THE EFFECTS OF INCREASED TAX ON TOBACCO IN THE PHILIPPINE ECONOMYAS A PARTIAL FULFILLMENT
OF THE REQUIREMENTS IN ECONOMICS
\SUBMITTED BY GROUP 15,
LABRADO, BENISA AUDINE MARIKSISON, MA. MARA
TALAG, SHAUN EDWARD
TANDOC, ALYSSA
TOJINO, DANA AGNES
TOLOP, SARAH JOYCE
ULPINDO, BERNADETTE
OF BSN2-4 FROM
MANILA CENTRAL UNIVERSITY
SUBMITTED TO MR. RODANTES RIVERAON THE 12TH OF MARCH, 2011
AcknowledgementIt is a pleasure to thank those who made this study possible: Nursing Students of Manila Central University, who willingly cooperated and served as our respondents; to Mrs. Fe P. Arias, section chief of tobacco in Bureau of Internal Revenue, who smartly and honestly answered our interview questions; to the authors of the books, newspaper and magazine articles, and websites that we used as our sources; and to all those who supported and believed in us. This wouldnt be done without your help.Group 15, BSN2-4
Table of ContentsI. Chapter I: The Problem and its Background
Introduction
Statement of the Problem
Statement of the Objectives
Significance of the Study
Scope and Limitation
Definition of Terms
II. Chapter II: Review of Related Literature
Local Related Studies
Foreign Related Studies
III. Chapter III: Methodology
Research Design
Research Local
Data Gathering Procedure
The Population and Sample Size
Sources of Data
Instrumentation
Statistical Treatment of Data
IV. Chapter IV: Presentation, Analysis, and Interpretation of Data
Respondents Personal Data
Respondents Personal Views
V. Chapter V: Conclusion
VI. BibliographyChapter 1
The Problem and its Background
Introduction
Tobacco is one of the main sources of living in the Philippines. On the other hand, tobacco also is the only legal consumer product that kills, when used as intended, and is highly addictive with half of all long-term users are dying from their addictions. This is the reason why its use is discouraged by putting retail tobacco products to high levels of taxation.
Philippines is one of the countries who has increased, and has still increasing tobacco tax. But this doesn't seem to be high enough to stop, or even just to minimize Filipinos from using tobacco products, specifically cigarettes. Since they are known to be resourceful, they've thought of different ways for the said product to be consumed easily, like selling single-stick cigarettes instead of packs and/or cases. These single-sticks are sold not to adults ONLY, but to young children too, exposing their early minds to curiosity for such vices. And so, the government has come up with a proposal - the 400% increase in tobacco tax - to minimize the Filipino, especially the young, smokers.
As to this, we are not sure if everyone will agree, we are not sure if everything will turn to be good results, and we are not sure if every smoker would rather stop smoking than think of other alternative, that's why surveys, interviews, and researches were conducted to obtain different views and opinions from different individuals. A study has been made to present what may be the economic effects of increase taxation on tobacco, both negative and positive.
Statement of the Problem
This study primarily aimed to determine the effects of increased tax of tobacco in the economy of the Philippines.
Specifically, this study sought to answer the following questions:
1. What is the profile of respondents in terms of
1.1 Age
1.2 Gender
1.3 Socio-Economic Status2. What are the effects of increased tax of tobacco?
3. What are the benefits of increased tax of tobacco in the economy?
4. What are the problems met by the manufacturers of tobacco in the increase of tax?Statement of the Objectives
This study aims to attain the following objectives:1. To know the effect of increased tax tobacco.2. To know the benefits of tax increase of tobacco in the economy.3. To know the problems met by the manufacturers of tobacco in the increase of tax.Significance of the Study
This study shows the significance of the effects of tax increase of tobacco in the Philippine economy.
The Administrator for them to be more credible in raising and helping students about the effect of tobacco tax increase in the Philippine economy, that may help them enhance their self worth and become productive citizen someday. The study may also aid them in being more vigilant on the increase of taxes, which help economy in the tax increase of tobacco. Students for them to be more aware that cigarette smoking is dangerous to their health. They must also know that increased taxes can lessen smoking of students.
Researchers for them to have an overview of the study they are going to conduct as it may be similar to what the present study encompasses. They might also be enlightened that tax increase helps the Philippine economy.
Manufacturers - as the major producers they also serve as the suppliers of the products, knowing that their products can benefit the Philippine economy, thus, resulting to higher demand among consumers.Scope and Limitation This study is about the effects of the increase tax of tobacco in the economy of the Philippines. Data was taken from the nursing students of Manila Central University by conducting a survey and interviewed one of the employees from the excise tax division of the Bureau of Internal Revenue (BIR) of the Philippines last March 7, 2011. We have also collected information about the benefits and problems that will occur when the tax on the tobacco increases. The Republic Act No. 9334, which provides for automatic excise tax increases every two years from 2005 to 2011, was also included.Definition of TermsThe terms indicated below were defined lexically and operationally in order to facilitate a clearer understanding of this research study. It included:
Accumulation of capital -refers simply to the gathering or amassment of objects of value; the increase inwealth; or the creation of wealth.Benefits- refers to something that promotes or enhances well being; an advantage of taxes increase in tobacco.
Economy- consists of theeconomic systemof a country orotherarea, thelabor,capitalandland resources, and theeconomic agentsthat socially participate in the production, exchange, distribution and consumption of goods, distribution consumption of goods and services of that area.
Economic system- is the structure ofproduction, allocation of economic inputs,distributionof economic outputs, and consumption of goods and services in an economy. It is a set of institutions and their social relations.
Consumers - refer to one that consumes, especially one that acquires or services for direct used of tobacco.
Profile - refers to a set of characteristics developed for use in identifying persons or things as being likely to develop certain group.
Tax - is to impose a financial charge or other levy upon ataxpayer by astateor the functional equivalent of a state such that failure to pay is punishable by law.
Tobacco - is anagriculturalproduct processed from theleavesof plants in the genusNicotiana. It can be consumed, used as anorganic pesticideand, in the form of nicotine tartrate, used in some medicines.Chapter 2
Review of Related Literature
This chapter presents a review of related literature and studies, both local and foreign which are clearly related in the present study.
LOCAL RELATED STUDIES
Tobacco in the Philippines experienced a decline in volume sales over the review period as the effects of the global economic recession became more apparent in the Philippines. A slowdown in inbound tourist arrivals, which are made up predominantly of foreign visitors and Filipinos living overseas or balikbayans, caused a reduction in demand for cigars whilst increases in cigarette unit prices and the lack of job security in the Philippines resulted in cutbacks in cigarette consumption among low-income smokers. Nevertheless, the main industry players attempted to offer attractive price promotions and introduced smaller pack sizes in more brands in an attempt to minimize the drop in demand.
Increase in Excise Tax Pushes Cigarette Unit Prices Up
Unit prices of cigarettes rose during 2009 due to the scheduled excise tax increase implemented in January 2009 as part of the measures contained within the Sin Tax Law (RA 9334). Despite the dismal economic situation in the Philippines, cigarette manufacturers and distributors absorbed part of the unit price rise in a bid to sustain demand for their products and prevent smokers from trading down to more affordable brands. Cigars also posted higher unit prices despite no changes being made to cigar excise tax.Fortune Tobacco Corporation Continues to Lead Tobacco in the Philippines
Tobacco in the Philippines remained highly concentrated in 2009 and dominated by cigarette manufacturers Fortune Tobacco Corp and Philip Morris (Phils.) Manufacturing Inc. The strength of these companies is due to their extensive distribution networks which encompass both traditional and non-traditional retail channels as well as their ability to offer their products at affordable prices. Top player Fortune Tobacco Corp maintained its leadership position throughout the review period as mass market cigarette smokers continued to purchase its economy cigarette brands, particularly leading brand Fortune International.
Sari-sari Stores and Street Vendors Remain Significant Distribution Channels
In 2009, tobacco distribution was largely driven by cigarettes, which continued to generate the bulk of tobacco volume sales. The popularity of the traditional convenience stores known as sari-sari stores and street vendors as distribution channels reflects the nature of cigarettes in the Philippines, which is focused on the sale of single sticks. Direct selling, machine-based vending and internet retailing remained non-existent in tobacco in the Philippines over the review period.Volume Sales are Projected to Slow Down Over the Forecast Period
Growth in volume sales of tobacco is expected to slow down over the forecast period. This is mainly due to the anticipated approval of picture-based health warnings on all tobacco packaging and the mooted single tax system, both of which are expected to deprive tobacco manufacturers and distributors of new, younger consumers to replace the long-term smokers who are giving up due to ill health or dying as they age. Higher unit prices are also expected to minimize tobacco consumption, particularly among poor Filipinos, who comprise the bulk of the smoking population.
One of the most commonly discussed issues in economics is how tax rates relate to economic growth. Advocates of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. Others claim that if we reduce taxes, almost all of the benefits will go to the rich, as those are the ones who pay the most taxes.
The World Health Organization is strongly advising the government of the Philippines to increase excise taxes on cigarettes, citing the low tax on such products in the country as one of the catalysts in the increase of tobacco-related diseases, it has emerged.
The request was put forward in a letter sent to the Philippine Department of Finance, which argued that the low tax on cigarettes is not helping to discourage their purchase.
According to reports in the national media this week, Finance Under Secretary Gil Beltran commented: "They...asked us if we could raise the tax some more because it is true that the tax here is low compared with what is imposed in neighboring countries." The Philippines currently imposes the lowest excise tax on cigarettes among Southeast Asian countries. Beltran reportedly went on to state that the DOF was willing to work with the idea of raising the excise tax on cigarettes, and acknowledged that the existing tax rates were out of date.
August 13, 2010 - The Department of Health (DOH) is pushing for a 400% increase in the tax on cigarettes. The tax hike would bring up the price of a cigarette stick from P2 to P7, and a pack from P30 to P120. The DOH said the move would help reduce the number of smokers in the country, deter the youth who comprise 20% of the smoking population while allowing government to raise revenue to bring down the budget deficit. DOH research shows that 4 out of 10 Filipino adults smoke, while over 20% of Filipino smokers are between 15 to 20 years old.
Increasing the tax for cigarettes to P4.50 per stick or P90 per 20-stick pack was one of the ideas proposed during a meeting between officials from the Department of Health and anti-tobacco advocate Framework Convention on Tobacco Control Alliance Philippines (FCAP), reports Inquirer.net. The current tax rate per cigarette pack ranges from P2.47 to P27.16 "placing the Philippines among countries selling the cheapest cigarettes in Asia," according to FCAP. Should the tax increase be implemented, the cost of a cigarette stick would range from P5.50 to P7.50, and a pack from P97 to P190 (4.20 USD), according to the report.The idea is inspired by the "Aquino model," according to Inquirer.netIn February 2009, Philippine President Binigno Aquino III, signed a bill legalizing the increase in cigarette tax from 30 to 120 per pack to raise funds for the health insurance of poor children.In the Philippines, the funds raised from the tax increase would be partly used for the health care of about five million poor Filipinos.Society as a whole would not be very productive if everybody spent a large portion of their time trying to evade taxes. The government would earn very little income from taxation, as very few people would go to work if they did not earn an income from it.
Almost 28.3% of Filipinos over 15 years old - more than 24.6 million people are smoking, according to non-governmental groups like Health Justice. A Global Youth Tobacco Survey in 2007 related that children with the age of 13 are among the smokers and are contributing to the four million youth between 13 and 15 years addicted to cigarettes.
In 1995, Philip Morris Internationals (PMI) advertising agency, Leo Burnett, summarized the Philippine situation with the slogan There cant be a better time for the tobacco industry. According to the agency, international anti-tobacco activists had nominated the Philippines as having the strongest tobacco lobby in Asia. By 1996, the Philippines ranked first in sales for PMIs Asian region and continued growth led to the establishment of a US$300 million manufacturing facility in the country which commenced production in 2003.
The Philippines (population 80 million) is the 15th biggest consumer of cigarettes in the world and the largest consumer among the Association of Southeast Asian Nations (ASEAN) Some 54% of adult men and 11% of adult women smoke with overall adult smoking prevalence being the fourth highest among ASEAN countries. Tobacco use among Filipino youth (18 years or less) is high, with approximately 37% of young men and 18% of young women smoking on at least a monthly basis. There has been a 33% increase in the prevalence of having ever smoked since 1995. Alarmingly, almost one fifth of young Filipinos begin smoking before age 10. A 1999 government white paper on smoking calculated that two Filipinos die every hour from tobacco use.
Cigarette prices in the Philippines are low, with the price of Marlboro being the second lowest for all ASEAN nations. The cigarette market has been dominated by menthol brands for several decades, although non-menthol volume has been steadily improving in recent years. La Suerte Cigar and Cigarette Company and the Fortune Tobacco Company (FTC) have been the two leading producers, and have had licensing agreements with PMI and RJ Reynolds (RJR) respectively. FTC commands a 67% market share, while La Suerte holds a 25% share. Unlike other Asian nations, the Philippines is a highly Christian country, with approximately 80% of the population being Catholic. English is spoken widely, with a recognizably American accent. There has been a strong US presence in the Philippines since the American colonial period from 1901 until 1946. This presents a rare cultural consistency between an Asian nation and the Anglophone tobacco transnational.
Poverty and unemployment remain the countrys gravest economic problems. Gross national income is $1020 per capita, and approximately 28% of people live below the national poverty line. Economic problems are higher in rural areas where some 55% live in poverty. For many years, the Philippines was governed by an administration with a global reputation for corruption, particularly during the presidency of Ferdinand Marcos (19721986). The commercial necessity of using contact men to facilitate cronyism in conducting business was acknowledged in an early Philip Morris document. In the first paper to report on revelations from the tobacco industrys internal documents, this paper examines the conduct of the tobacco industry in this political and commercial environment, highlighting tactics and episodes illustrative of the companies conduct in thwarting tobacco control.
The tobacco industry was well aware of the economic advantages of cronyism. A Lorillard executive highlighted this in 1973: Again the government has postponed the announced tax increase It is entirely possible that there will be no increase as the implementation dates have now twice been delayed and according to reliable sources will be put off again for a price the government has been bought off twice and it is possible for it to happen again as the manufacturers stand to lose considerable revenue if the bill is enacted.
The general manager of the FTC, business tycoon Lucio Tan, was able to evade and hinder tax changes through his long established relationship with the Cabinet. Tan had close ties with the Marcos regime and beyond, where embedded cronyism assisted him in instilling a protectionist policy for his company. Tan was said to have gotten his way by convincing Congress to stay with a two tiered ad valorem tax system which gave FTC a pricing advantage over its competitors.Increasing the tax on tobacco products may also contribute to several acts such as the increase of cigarette theft, smuggling in and out of the country, producing counterfeit cigarettes and numerous count of unemployment. In addition to that, the manufacturers will experience a decline on their income as well as their customers. These are considered to be as rebound effects in relation to the said study.
FOREIGN RELATED STUDIES
Taxes on tobacco products in the Philippines are at just 14 percent, in contrast to 70 percent Thailand, the highest in the region and 69% in the affluent city-state of Singapore and. While a packet of the original Marlboro, a product of Philip Morris International (PMI), sells for US$8.70 in Singapore and $2.50 in Thailand, the same packet ofMarlboro Redgoes for just 0.70 cents in the Philippines. This is cheaper than in Indonesia, where the same packet of 20 cigarettes sells for $1, or Laos, where it sells for $1.73.
Because of thecheap cigarette pricesPhilippines is considered to be in the list of the top 15 cigarette-consuming countries in the world. A report was made which estimated that 84 billion cigarettes are smoked every day in the country. In that list we can find also Indonesia and Vietnam. Indonesia has the highest number of tobacco smokers and especially cigarettes at some 63 million people - or 40% of Southeast Asias 125 million smokers.
Earlier this month, the manufacturer of Marlboro, Parliament and Virginia Slims, Philip Morris USA, increased prices by 71 cents a pack, 9 cents more than the federal tax increase. The maker of Camel, Kool and Salem cigarettes, R.J. Reynolds Tobacco, bumped wholesale prices up by 44 cents a pack and reduced discounting.
The revenue from the tax increase, which will be used to expand coverage under the State Children's Health Insurance Program to an additional 4 million low-income children, was signed into law in February.
It calls for a 62-cents-a-pack increase, to $1.01, in federal excise taxes on cigarettes for the nation's estimated 45 million cigarette smokers as well as increases in taxes on little cigars, cigars, and pipe and chewing tobacco.
The higher prices should have the positive effect of reducing teenage smoking, according to Dr. Jonathan Klein, a professor of pediatrics at the University of Rochester.
New York also imposes a 4% state sales tax on tobacco products, said Tom Bergin, spokesman for the state Department of Taxation and Finance. Local sales taxes push up the overall sales tax to more than 8% in Yonkers and New York City and on Long Island.
But the biggest impact is expected to be hundreds of miles away from the Empire State, where tobacco taxes are low. South Carolina has the nation's lowest tax on cigarettes 7 cents a pack. Missouri imposes a 17-cents-a-pack tax.The current average among the states is $1.19 a pack, according to Eric Lindbloom, director of policy research for the Campaign for Tobacco Free Kids. Dr. Irwin Redlener, president of the Children's Health Fund in New York City, predicts that adult smokers who are economically "on the edge" also may quit. But Redlender said he dislikes the fact that the tax increase was used to finance an expansion of the State Children's Health Insurance Program under legislation signed into law in February.
The Campaign for Tobacco Free Kids is hailing the fact that the tax increase will equalize the way that small cigars, which are increasing in popularity, are taxed. "They really are cigarettes pretending to be little cigars so you can pay less tax," Lindbloom said. "This is a problem nationwide. It's a problem with state tax rates. It's a big deal because cigarette sales have been going down, but little cigar sales have been going up."
The International Premium Cigar and Pipe Retailers Association predicts that the nation's estimated 12 million cigar smokers and 1.2 million pipe smokers will trade down to less-expensive blends. The average cigar smoker smokes only two cigars a week, said Joe Rowe, the group's executive director.
A proposed 500 percent excise tax increase on other tobacco products could decimate Marylands cigar and pipe tobacco businesses, according to the International Premium Cigar & Pipe Retailers Association.Maryland House Bill 853 and Senate Bill 654 both propose to increase the excise tax rate on tobacco products other than cigarettes from 15 percent to 90 percent with a $3 cap on cigars.
When will legislators realize that tax increases like this never produce the revenues predicted and always result in negative consequences like lost jobs and businesses? asked Chris McCalla, legislative director of the IPCPR. In a small state like Maryland, tobacco customers can easily cross to another state or make their purchases online and pay little to no state or local taxes.
According to the Tax Foundation, a nonpartisan educational organization founded in 1937, Maryland was the only state to raise every major tax in 2008 in order to fund new spending programs including doubling of its cigarette tax from $1 to $2 per pack. The Foundation said the tax increase served to introduce record levels of bootlegged product into the state, hurt local businesses by sending thousands of the states smokers to surrounding states to purchase their tobacco products, and generated only half the revenue increase predicted by tax supporters.
In addition, the Childrens Health Insurance Program Reauthorization Act of 2009 is funded solely by excise taxes on tobacco products. CHIP raised federal taxes on cigarettes to more than $10 per carton and on roll-your-own tobacco from about $1.10 per pound to $24.78 per pound a 2,253 percent increase.
Now the Maryland legislature is considering raising excise taxes yet again on other tobacco products from the current 15 percent of the wholesale price to 90 percent,McCalla believes the only result that would be sure to take place from such an action is the further destruction of Maryland small businesses, which includes the loss of jobs and state, federal and local tax revenues.
Premium cigars are highly sensitive to price increases because they are more a choice than a habit. They are adult products that make ordinary moments special and special moments extraordinary, like a fine wine. McCalla urged Maryland smokers and nonsmokers alike to tell their state senators and delegates to vote no on tax increases such as these.Chapter 3Methodology
This chapter presents the research design and procedures used in this study. This covers the research method used, research locale, description of the subjects, population and sampling scheme, instrumentation, data gathering procedures, and the statistical treatment of data.
Research DesignThis studies on the effects of tax increase in the economy on tobacco. The researcher made use of the descriptive method, which involves gathering of data, interviews and information derived primarily from survey and with the use of questionnaires. According to Good and Scates (2002) put in descriptive research purpose to presents facts concerning nature and status of anything. (Good Carter & Scates B.E.)
The objective of descriptive research is to describe the market characteristics or functions. It is characterized by a structured, preplanned approach. Surveys and consumer panels are examples of descriptive research. The most common type of descriptive marketing research is the cross sectional survey or longitudinal survey. Research Locale
The researchers conducted at the Manila Central University (MCU) of Caloocan City about the effects of tax increase of tobacco in the economy. Basically, the researchers chose this topic to know the effect of the tax increase in the economy.
Data Gathering Procedure
The researchers personally gathered data needed for this study by means of reproducing 50 copies of questionnaires. The data gathered used the instrument developed for the purpose. The researchers asked permission from the school premises to conduct study.
The Population and Sample Size
Fifty respondents (50) were requested to answer the questionnaires floated. The data gathered were then analyzed and interpreted to come up with the conclusion. Since the number of respondents did not exceed one hundred, the determination of sample size of the population is not necessary so all of them were taken as our respondents in the study. Sources of Data
The sources of data are the questionnaires that have been retrieved at the school premises of Manila Central University. The researchers started to tabulate the raw data from which statistical tables were constructed. Analysis used simple frequency count, percentage and ranking. Instrumentation
The researchers used questionnaire as their instrument in collecting data. It was on a checklist form, where the respondents check the most applicable answer for the given questions.
Statistical Treatment of Data
The data gathered from the research instruments were grouped, statistically treated and presented in table. Responses for every variable in the questionnaire were tallied to give reliable and sound analysis and interpretation of the data. The researchers used the frequency distribution having the formula:
F
P = _____ x 100
N Where: P = percentage of respondents/response
F = frequency
N = total number of respondents/responseChapter 4
Presentation, Analysis, and Interpretation of DataThis chapter presents, analyzes and interprets the data gathered in order to know the effect of tax increase in tobacco in the economy. Sets of questionnaires were distributed to 50 respondents to gather necessary information and data needed in the research study.Respondents Personal DataTable 1: Gender
RespondentsFrequencyPercentage
Female2550%
Male 2550%
TOTAL 50100%
From the 50 respondents, 50% were females and 50% were males(as shown on the table above). The researchers purposely chose the gender of the respondents to compare the different point of views as they may have various lifestyles.Table 2: Socio-Economic StatusRespondentsFrequencyPercentage
Low Class36%
Middle Class4182%
High Class612%
TOTAL50100%
It shows in this table that 6% of the respondents are from low class, 82 % from middle class and 12% are from high class group. The data above helped the researchers analyze that the majority of the respondents are of middle class.Table 3: AgeRespondentsFrequencyPercentage
15-182346%
19-212754%
TOTAL50100%
It shows in this table that 46% of the total respondents are at the age 15-18, while 54% are at the age of 19-21. It is shown that the majority of the respondents are 19-21 years old.Respondents Personal ViewsTable 4: Respondents Who SmokeResponseFrequencyPercentage
Yes1632%
No3468%
TOTAL50100%
Out of the 50 respondents, 32% are smokers and 68% are not. Most surveyed were not using tobacco products, particularly cigarettes, but they still have an opinion about the increase of tax on tobacco.
Table 5: Frequency of Smoking
ResponseFrequencyPercentage
Everyday1326%
Once or Twice (weekly)12%
Occasionally24%
None at all3468%
TOTAL50100%
From the 50 respondents, 26% smokes everyday, 2% smokes once or twice in a week, 4% smokes occasionally and 68% doesnt smoke at all. Most of the smokers are smoking everyday.Table 6: Stick(s) Consumed Per Day
Stick(s)FrequencyPercentage
1-248%
3-424%
5-624%
7-812%
9 or more714%
None3468%
TOTAL50100%
Out of the 50 respondents, 8% consumes 1-2 stick(s) per day, 4% consumes 3-4, 4% consumes 5-6, 2% consumes 7-8, 14% consumes 9 or more and 68% are non-smokers. Most of the surveyed smokers, uses/consumes 9 sticks or more in just a day.Table 7: Expenses for Cigarettes
ValueFrequencyPercentage
1-5 PHP48%
6-10 PHP24%
11-15 PHP24%
16-20 PHP12%
21 PHP or more714%
None3468%
TOTAL50100%
As shown on the table above, 68% of the respondents spend nothing for cigarettes, 14% spends 21 PHP or more, 2% spends 16-20 PHP, 4% spends 6-10 PHP and 11-15 PHP, and 8% spends 1-5 PHP.Table 8: Reaction on the Increase Tax Proposal
ResponseFrequencyPercentage
Its okay with me.816%
Ill stop because it is way too expensive.36%
Ill just lessen my consumption.510%
I dont smoke, so I dont really care.3468%
TOTAL50100%
Out of the total respondents, 16% reacted on the Increase Tax Proposal that its okay with me, 6% reacted Ill stop smoking because its way too expensive., 10% said that Ill just lessen my consumption, and 68% said that I dont smoke, so I dont really care.Table 9: Proposal for increase tax of Tobacco
ResponseFrequencyPercentage
Yes2652%
No2448%
Total50100%
Out of 50 respondents, 52% agreed for the increase tax on tobacco products and 48% are not agreed for this proposal of the government.
Table 10: Effects to Economy
ResponseFrequencyPercentage
Lessen pollution and smokers.3264%
Decrease in number of people developing smoking-related diseases.3366%
Decrease in mortality.2754%
Increase government revenue.1938%
Smokers will just switch to lower price brands.1530%
Smokers have to budget their consumption.918%
Government will probably just corrupt the money.1938%
Increase cigarette theft and smuggling.1122%
Counterfeiting cigarettes ( FAKE ).918%
Unemployment increase.3060%
Out of total respondents, 64% answered Lessen pollution and smokers , 66% answered Decrease in number of people developing smoking-related diseases, 54% answered Decrease in mortality, 38% answered Increase government revenue., 30% answered Smokers will just switch to lower price brands., 18% answered Smokers have to budget their consumption., 38% answered Government will probably just corrupt the money., 22% answered Increase cigarette theft and smuggling., 18% answered Counterfeiting cigarettes ( FAKE )., and 60% answered Unemployment increase.. Majority believed that the increase of tobacco tax has an effect of Lessen pollution, smokers and Decrease in number of people developing smoking-related diseases but unemployment will continue to increase.
Chapter 5ConclusionBased from the survey weve gathered, most of the respondents who smoke dont mind the increase of tax in tobacco products such as cigarette, as long as they still get to smoke. The majority of the respondents think that the government will pursue the proposal of 400% increase tax on tobacco products as soon as it is legalized. Most of them think that the continuous tax increase will lessen the pollution, and the number of people developing smoke-related diseases will decrease.
Therefore, when the tax in tobacco products increases, it will have a positive impact in our economy because according to the Bureau of Internal Revenue, almost half of the taxes that they have collected came from tobacco products. The taxes that were collected will then be distributed to different sectors of our government, especially to the less fortunate area that needs further financial assistance to improve their own community.
According to the records of the BIR, the volume of consumer decreases when there is an increase tax on tobacco products. This is a negative effect for the manufacturers, and at the same time, for our economy. This decrease on the volume of consumers will only last for the first 2 months because the consumers will have to adjust on the price increase.
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