Perhaps recognizing that contradiction, Dominguez has lately focused more on the anti-tobacco aspect of the sin tax than its revenue generating objectives. Of the several bills introduced in Congress to raise the sin tax, Dominguez favored the one that would impose the largest immediate increase, from P35 to P60 per pack, with a nine percent annual increase after that. First, the Finance chief needs to be disabused of the notion that sin tax rates and smoking prevalence are correlated, because they are not. Numerous studies have been done to try to find the connection, and have uniformly concluded that the effect of higher sin taxes are usually so small as to be statistically insignificant. Tobacco is a high-value commodity for which demand is highly inelastic, and in that sense is a good source of tax revenue.

Source: Manila Times June 01, 2019 16:07 UTC