Thursday, March 15, 2012

Tobacco Tax 8: Ban Smoking, or Raise its Tax?

A fellow UPSE alumni and a friend in one of my discussion yahoogroups, Gary Makasiar, made a good argument that instead of debating by how much tax hike to slap on tobacco products, ban smoking outright. Posting this with his permission. The photos are not part of his original posting, I just added them here.  Our exchange has extended, I am putting the dates when the exchanges have taken place. Almost 10 pages long.
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10 March 2012

If we really believe smoking tobacco kills, why is the debate still circling around a/the sin tax? If we are honest with our premises, we should just outright ban domestic smoking of tobacco. The sin tax does not have to even figure in. This tax debate is appearing to be just like some tongue-in-cheek pontification. Proponents pretend to tax in the name of public health but secretly pray for smokers to continue their destructive vices to generate revenue. Much of the tax-happy pressure is coming from financial institutions, not health institutions If we want to realize zero local smoking at the soonest time, the most honest and dramatic way is to make smoking illegal overnight. That automatically does away with the tax debate, altho admittedly, it may not necessarily eradicate local smoking unless enforcement is strict and impeccable.


We should not even be hoping to realize taxes from local smoking if we are sincere about its evil effects. So why does a raging tax debate continue to be entangled with a public health no-brainer? Because any tax deliberation (including the sin tax) could only have arisen from fiscal and financial sources, considerations, motives and objectives. The social harm caused by smoking seems to have been used only as a convenient excuse (escucha) to justify a new tax initiative. Sadly, everyone around the table speaks with forked tongue and bad nicotine breath.


If smoking is truly a health hazard in whatever form, then the logical solution is to ban it. Smoking is anyway easy to monitor and enforce. Th light is visible and the smoke is easily detectible. The telltale signs are difficult to hide indefinitely. Huge rewards for whistleblowers should go a long way to help enforcement. The livelihood of the tobacco farmers can (and indeed, will have to) be addressed as a separate issue. Their efforts can be redirected entirely or partly to tobacco exports instead of being focused on the local market; and for those in farms that no longer have comparative advantage in growing tobacco, the skills of farmers there can be diverted to other crops that enjoy sustained regional demand (congress can allot budgets for retraining purposes, if they feel this to be a national imperative...but it does not have to come from a sin tax at all. Most probably it wont even be necessary as farmers and local enterpreneurs naturally migrate away from the unprfitable tobacco crop), or else to smuggling out local tobacco manufactures towards countries that impose atrociously high sin taxes on tobacco consumption.


Of course, it has to be realized tho that banning could very well just replay the prohibition years of the 20s in the US. Which gave rise to organizations and deviant celebrities like Al Capone. Contraband money was so good that these bosses were rumored to have corrupted city officials so thoroughly everywhere they operated. They became known as untouchables. The stakes were so high, that bootleg rival gangs thought little of wasting each other away. Of course, the alternate version is that local politicians were actually the ones in control and just let Capone and the others do their dirty work, including offing each other.. It is said that local officialdom was so corrupted and local govt protection so complete that the Fed government could only take Capone out on tax evasion charges. No smuggling charge could be made to legally stick. Finally, the US government (possibly envious of city officials) had to back track and lift the policy of prohibition altogether.The problem is that tobacco smoking is a nastier health hazard than alcohol, because of second and third hand smoke. Alcohol is not yet known to possess a similar externality. although drunken driving has had its fair share of the annual death toll.


Not too far back in our history (late 50s, early 60s), blue-seal cigarette smuggling also became rampant when imported brands were subjected to high import duties. Most industry players had to play ball with the politicians who controlled the coastlines nearest to the local markets for protection and safe harbor, and later on also with those who controlled the tobacco-growing regions to benefit from the "protection" offered by the high 'tariff walls'. This period in our history is well known and well-documented. This is prolly what the opponents of the high sin tax are warning against. But if everyone is seriously debating public health, taxes do not even have to figure. If they comtinue to do so, it must be because there is another root agenda even more important to some people than just public health. Possibly, the public kitty.


Here kitty kitty kitty. There kitty kitty kitty. everywhere kitty kitty kitty.

-- Gary

I thanked Gary for his well-argued position. On outrightly banning tobacco products for public health reason, here are some scenes that I see.

1. The corrupt government (national and local) officials and employees who will implement this will be very happy. It will be like the current policy of banning prostitution, banning shabu and other dangerous drugs and substances, banning jueteng and other gambling. All these things banned, sure, but they are all existing, alive and kicking, just around us. Banning them is abetting and encouraging more corruption in government, not controlling or reducing bot the use and practice of those services, as well as government corruption.

2. The public finance officials like those at the DOF, DBM, NEDA, and also those in Congress, will be unhappy because as Gary pointed out, revenues from tobacco products are about kitty-kitty-kitty. They want money from anywhere and from anybody. Pick any reason or alibi, so long as they can get more money from the public with the least resistance, they will do it. If raising the income tax (personal and corporate) to 50 percent or higher will meet minimal resistance, they will do it

3. The health officials like those from the DOH, PhilHealth and PopCom will be unhappy too, contrary to what Gary and other people believe. The health officials have already factored in xx billion pesos per year that will go to their agencies to finance universal healthcare, to finance the fight against lifestyle-related non-communicable diseases (NCDs), and to finance the purchase of various population control paraphernalia via the forthcoming Reproductive Health (RH) law.

4. The poverty fighters at the UN,WB, ADB and other multilaterals will also be unhappy as all their grand designs and plans to "fight/eliminate poverty" are premised on the government having as much tax money as possible. Even if the government will collect just one-half or one-fourth of the projected P60 B per year in additional revenues from the tax hike, hey, that's still money that can help finance the MDGs and other central planning measures to "fight poverty."

5. Hard core smokers will be unhappy too because the government, again, intervenes in what they think and feel gives them personal utility and satisfaction. Majority of smokers, including PhD guys, alive or already dead, are aware of the risks of smoking but they still want to smoke, why prohibit them from doing so? It's their own lives, their own body and lungs, that will suffer, not somebody else.

People can argue that second-hand smoke is more dangerous than that puffed by the smoker. I disagree. A smoker inhales both first hand and second hand smoke.

So with the above considerations, it seems that allowing smoking but taxing it high enough -- not outrightly banning smoking -- will make the majority of stakeholders happy. Both the tax-hungry and health officials and bureaucracies, the legislative bureaucracies, will be happy, along with the smokers, hard-core or soft-porn smokers.



Smoking is indeed a health hazard, I think there is little or zero debate about that. But people own their bodies, their minds and their lungs. If government will extend its nannyism and will nanny everything, soon government will also prohibit people from climbing trees, prohibit eating french fries and other junk foods, prohibit drinking soda and juices with xx percent sugar content, etc., because such acts can endanger their lives and when they get sick or get hospitalized, government may directly or indirectly shoulder a part of their healthcare.

Would people be happy with an extended nanny state, telling people do not do or smoke this, do not eat and drink that, do not climb there, do not... so many Nos and prohibitions? All for public health, all for public welfare safety and other reasons or alibi. I do not think so.

I understand the concern of many people why government should intervene in people's smoking. Before heavy smokers would expire from the planet much earlier than the rest of humanity, they will punch huge holes in the family (and their friends and relatives') pockets and savings in the form of costly healthcare treatment. For instance, to kill throat or lung cancer cells at Stage 1 would already cost tens (if not hundreds) of thousands of pesos. The cost goes higher as the cancer reaches Stage 2 or higher.

Still, I do not support heavy state nannyism. People own their lives. If they want cliff jumping and motorcycle somersault as a hobby, if they want frequent smoking, drinking and partying as a hobby, so long as they did not steal from other people to finance their hobby, so be it. What concerned citizens, civil society groups and the government can do, is to inform people of the risks of each lifestyle and hobby, then back off. Get out and shut up after sometime. There is a limit to giving such advice and warning to adults. In exchange, people will also not be forced or coerced to bail out those who experience health and financial troubles after sometime. Any support, moral or financial, should be purely voluntary, not via coercion like more taxation.

So I think a hike in tobacco tax is still a good move compared to outright banning smoking. But more desirable, is when government will also drastically cut, if not abolish, income tax. Government collects many forms of consumption taxes and mandatory service fees to allow it to retain its expansive and bloated bureaucracies. Like VAT, excise tax, property tax, vehicle registration tax, entertainment/amusement tax, travel tax, driver's license fee, passport fee, police/NBI clearance fee, birth/marriage/death certificate fee, etc.

12 February 2012

I started out by postulating that the proponents believe the premises, which is, that smoking is harmful to everyone, not just the smokers.


If that is a given, how can taxes possibly trump outright banning??? We say smoking is a public health hazard.I assume when government says this, they are confident that they know better than evryone else. They have access to authoritative studies and hardly anyone still contests their premise or conclusion. In that regrad, Noy, they may have the right to nanny. Tobacco smoking apparently does not harm only the 'user' but also those around. Friends, enemies, loved ones, strangers. Second and third hand smoke are the culprit. This sets smoking apart from the other 'drugs'. And that is why it is a favorite bogeyman for finance people to ride on. When i say finance people, i also include multilateral types. Their concern is counterpart funds and debt servicing...and maybe public health too.


I am at awe of their argument of course. They say it is to 'deter the young people and the wage eartners'. I am not exactly clear why they are sure taxes will permanently deter tobacco usage by these groups. That does not seem supported by any study. neither do they feel the need for one. So inspite of having no ground to stand on, their optimism is outstanding. The final message is that smoking is not bad for your health, only for your wallet. Smoking and killing with second hand smoke is reserved for the rich only, So until you can afford it, you dont have the right to smoke. Unfortunately, the youth dream of 'being rich' one day, as do many wage earners. I dont need to expound further. Just read my lips. and watch the smoke exhale.\


So what about those already smoking today? If we are okay with them killing themselves, are we also okay that they kill those around them without their consent? Why do we not also deter the rich and those who can afford to poison the air we breathe? It is probably because we are arguing, if not with forked tongue, with forked logic. We are so willing for people to die, as long as meow meow. Either that or we dont really believe our premises, namely, that smoking is a killer public hazard. We are just using this bogeyman to justify an otherwise unpopular revenue-hair-and BP-raising activity.


I need to go and get a whiff, before prices start shooting higher. Some of us smoke just to get back at those who poison our air. With that attitude, finance should be able to raise more taxes. Public health and finance going hand and hand? Maybe inversely in this case.


Noy, if it is true smoking kills people, why should I (or you) care if a handful of finance or health bureaucrats will be happy or not, when the health of millions could be put at risk? If the premises are true, why7 should the government not nanny just because a handful of us believe so much in laissez faire?. Externalities are involved here. That makes a world of difference. The strength of an argument cannot be diminished on the basis merely of who mouths it. It either makes sense or it doesnt.


-- Gary

A cardiologist I've heard talking about cardiovascular diseases and other NCDs, said that one order of french fries alone (forgot if its medium or large) from our friendly mcdo or jollibee outlet already pumps in 1,000 calories. An average person needs only 1,800 calories a day to live healthy. So someone eating french fries (burger, soda, fried chicken not included yet) a day is already accumulating more fat than necessary. Entonsis, french fries is bad and harmful to people, especially toddlers and children.

A nanny state that declares smoking is bad for all and hence, smoking should be banned outright, can also declare frequent french fries is bad for all and hence, should be heavily regulated, heavily taxed, or be banned outright. Is this good? I don't think so.

The bad effect of declaring as many acts as prohibited and "illegal" -- prostitution, shabu, jueteng, smoking, french fries, etc. -- is that we will see an explosion of more government bureaucracies whose only job is to implement those prohibitions. Let us assume that all of them, 100 percent, are honest and non-corrupt and hence, will really penalize those they catch violating those prohibitions and restrictions, just imagine the thousands of plainclothes spies and uniformed personnel who will be hired by the government. More bureaucracies, more taxes, what else.

So you see, I am opposing banning not only of smoking, but many other acts and services that are currently being demonized and restricted by the government. I think that prostitution, drugs, shabu, jueteng, etc. should be allowed, government can just regulate and tax them. What government should really prohibit and demonize, are killers, murderers, thieves, rapists, land grabbers, kidnappers, carnappers, corrupt officials, plunderers, etc.

Smoking is bad for our health, so is frequent drinking, so is eating too many french fries and litson and burger and sweet food, so is over-sitting in front of tv or computer, etc. Cliff jumping, rock climbing, bicycle somersaults, deep sea diving, etc., can be harmful to people too. For each of these harmful acts, if the solution is outright banning and explicit prohibition in order to protect public health, public welfare and safety, a nanny state might just be creating millions of bondying among the citizens, almost everything have to be approved or allowed by the government to avoid fines or imprisonment.

2nd or 3rd hand smoke is harmful, true. Then that can be regulated. Govt should set "no smoking 100% restos", but govt should also allow "smoking restaurants", everyone inside -- customers, waiters, cashiers, cooks, etc. -- are smokers or have high tolerance for smoking. Non-smokers who enter such places and complain later of 2nd or 3rd hand smoke are idiots and should be penalized by puffing an equivalent of 1 drum of smoke to give them really hard lesson.

-- Nonoy

13 March 2012

Noy,
I am convinced now that you have indeed missed my central point.As I keep missing yours.
Smoking is different from other drugs and french fries, since smokers kill not only themselves but also those around them. Now that everyone knows and accepts that, therefor those who continjue to smoke . deliberately and knowingly kill themselves (presumably with consent) as well as those around them (more often than not, without their consent). Someone who knowingly kill others without the latter's consent (or even with) are often referred to as murderers. .Especially if they have nnot done them wrong (except if they are also smokers) If you are willing for govt to step in in the case of murderers...why not here?


-- Gary

What is third-hand smoke, and why is it a concern?

Answer from Lowell Dale, M.D.

Third-hand smoke is generally considered to be residual nicotine and other chemicals left on a variety of indoor surfaces by tobacco smoke. This residue is thought to react with common indoor pollutants to create a toxic mix. This toxic mix of third-hand smoke contains cancer-causing substances, posing a potential health hazard to nonsmokers who are exposed to it, especially children.

Studies show that third-hand smoke clings to hair, skin, clothes, furniture, drapes, walls, bedding, carpets, dust, vehicles and other surfaces, even long after smoking has stopped. Infants, children and nonsmoking adults may be at risk of tobacco-related health problems when they inhale, ingest or touch substances containing third-hand smoke. Third-hand smoke is a relatively new concept, and researchers are still studying its possible dangers.

Third-hand smoke residue builds up on surfaces over time and resists normal cleaning. Third-hand smoke can't be eliminated by airing out rooms, opening windows, using fans or air conditioners, or confining smoking to only certain areas of a home. Third-hand smoke remains long after smoking has stopped. In contrast, second-hand smoke is the smoke and other airborne products that come from being close to burning tobacco products, such as cigarettes.

The only way to protect nonsmokers from third-hand smoke is to create a smoke-free environment, whether that's your private home or vehicle, or in public places, such as hotels and restaurants.

-- from Ed

15 March 2012

My several follow up questions about his stand have remained unanswered (i.e., 1.why havent our 'cheap' tobacco manufactures made inroads into the vaunted 'free' market of HK? There should be a sizeable Filipin community there familiar with , if not actually preferring, the taste of our local cigarettes. Or have we already been exporting tobacco to HK? 2. why is he ready to accept govt prohibition of murder but not tobacco smoking which has prolly caused even more deaths ?) anyway, im not too hopeful anymore. If he is not just being fairly lazy, I assume he must just be hopelessly and romantically, busy being enamored with the idea of lazy faire.


-- Gary

Hi Gary,

To your questions:

1. challenge the competence, authority and allegations of this Dr. Dale

2. Why havent our 'cheap' tobacco manufactures made inroads into the vaunted 'free' market of HK? There should be a sizeable Filipin community there familiar with , if not actually preferring, the taste of our local cigarettes. Or have we already been exporting tobacco to HK?

3. why is he ready to accept govt prohibition of murder but not tobacco smoking which has prolly caused even more deaths?

On #1, It's actually the 1st literature I've encountered on "third hand smoke" and I will admit I was educated by his article as posted by Ed. I think 3rd hand smoke is everywhere -- from smoking, from carbon monoxide and nitrous oxide, from lead and particulates, from paint and rugby, from human and dog fart, from other gases near dumpsites, cement plant, coal plant, etc etc.

So if 3rd hand smoke from smoking -- which I agree can be harmful -- should result in proposal to ban smoking altogether, do we also propose to ban all cars, tricycles, buses, airplanes, etc. which emit not only CO2 but many other gases like the ones I mentioned?

On #2, I have no answer to that, I don't have the data if PH is exporting or not exporting cigarettes to HK. The 3 HK nationals that I wrote to ask what are the comparative prices of Marlboro, etc. in HK did not reply up to now.

On #3, murder is determined, deliberate act to kill someone in the shortest time possible, like shooting or whacking a victim's head with tubo-itak-espada-pala-piko-martilyo-other metallic concoction. Smoking is done to derive some personal pleasure on the part of the smokers, with a long-term negative effect to their health, and indirectly to those near them. They are two different things, they are like apples and dogs. Unless a person is a serial killer where he/she derives pleasure from killing other people, murder is often done out of sick minds, out of revenge, with little or no deliberate pleasure to achieve.

Former UPSE Dean Encarnacion I think died of lung cancer (guys, please correct me if I'm wrong). He's a heavy/chain smoker. Before he died of smoking-related disease, he derived xx years of pleasure smoking, has wrote and published xx dozens of articles in peer reviewed journals while smoking, he would be conducting meetings with UPSE staff (and even hold classes?) while smoking. Government prohibition of certain actions (like smoking) that give pleasure and utility to individuals, as long as other people are not directly harmed, is wrong.

Former UP President Dodong Nemenzo is another heavy/chain smoker. He has 101 percent awareness of the risks of smoking but he kept doing it as it gave him pleasure, conscious not to smoke in front of non-smokers.

Dodong is an incorrigible Marxist socialist, advocate of dictatorship of the proletariat and plain state dictatorship and central planning to achieve certain social objectives, but he never advocated state dictatorship on smoking or drinking or other vices that many welfarists and nannyists advocate.

-- Nonoy

What has Encarnacion and Nemenzo's experience have to do with it? Perhaps if they knew then, what we know now about 2nd and 3rd hand smoke, they would have quit earlier.Because for them to continue inspite of the new info, would be to will others to die from their 2nd and 3rd hand smoke. I dont know for sure. They are no longer around to support or refute it. It is just speculation on my part. Not much different from you just 'thinking' 3rd hand smoke is the same for all types of pollution, and then making the existential leap in a subsequent argument that it is. Rightaways, I am therefor compelled to remind and caution against practices used by fuzzy logic. One is begging the question (from just thinking something to already concluding it without prior or proper verification) . And the second, arguing from the specific (Enca and Nemenzo) to the general.


Regarding ur question on other pollutants, my reply is I have not heard that they also contain nicotine. But if they are found to emit similar chemical pollutants as from nicotine and tobacco, then yes banning would be appropriate, logical and fair. But I would not to be so quick as you to propose banning cars, tricycles, buses, airplanes and paint. My initial take would be to ban the toxic fuel or toxic additives, in favor of a cleaner ones and reconfigure carburetor systems altogether. to use such alternative fuels. I am told they have done somrthing about paint lead already. No need to ban houses,buildings,billboards and other painted structures. . I am not sure whether I had at any time suggested that government ban human beings or people who used to smoke tobacco. If I had implied anything that severe, I intensely apologize. My English has always been problematic and prone to misinterpretation ( a convenient excuse for debaters).. Allow me to make it clear now that I am only for banning smoking tobacco and not pre ious smokers. If marijuana tastes as good and without the cancer-causing toxins, I would lead the charge behind you to open the floodgates.


My final comment is that you adamantly refuse for government to prohibit or nanny on smoking..and yet in the same breath, are quick to propose confining smoking tobacco to certain establishments or restaurants? I am actually elated about your change of mind. How do you think that will ever happen without involving our nanny? Besides, if I am wrong and your proposal (which is nothing but an outright government prohibition or ban on smoking in 'open' places) can actually be realized, then there would be no further need to even discuss the desireability of new sin taxes for public health reasons. Only two remain. First is kitty kitty. The second is to 'favor' other manufacturers over the dominant firm.


I suppose we have already exhausted and gone past a truly productive debate because there seems to be no wilingness to submit to logic. I am feeling we are driven only to argue and defend to the death. Smoking will take me there faster, so if you will excuse me. I need to take a puff while I am still able to. And if no one is willing to yield, I volunteer to, if only .to preserve the peace. I therefor take back my smokers' mantra of never say die.


-- Gary

My argument against banning smoking has nothing to do with kitty-kitty. In fact I want all income taxes, personal and corporate, to be abolished. I want many other consumption taxes -- like travel tax, amusement tax, property tax, to be abolished. VAT + few others would be enough. Rather, my opposition to banning is based on protecting individual freedom. If people have great pleasure in smoking, in puffing nicotine into their throat, lungs and other internal organs, so be it. That way, we help pacify the population control advocates who are so worried of so many people in the planet, they want some people to die soon, or prevent the birth of those who are in the sperm-ovum stage yet.

-- Nonoy
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See also:
Tobacco Tax 4: Finding the Optimum, Not Maximum Cigarette Tax, May 26, 2011
Tobacco Tax 5: Consumer Demand After Tax Hike and Smuggling, February 23, 2012
Tobacco Tax 6: On Cigarette Smuggling, February 27, 2012.
Tobacco Tax 7: DOH on NCDs and Tax Hike, March 04, 2012

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