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Publication Detail
WP-2012-06: Exploring Responses to the Employment Impact of Excise Tax Reform: The Case of the Philippine Tobacco Industry

Sin tax reform was identified as priority legislation in the second Legislative Executive Development Advisory Council (LEDAC) meeting under the Aquino Administration. The proposed bill for sin tax reform, House Bill 5727, has been approved by the House of Representatives and by the Senate, and a jointly approved version is targeted to be approved by the end of 2012. Since the health costs are greater than the economic benefits of tobacco use (production–cultivating and manufacturing, retail, taxes), the reduction of tobacco consumption is a more sound policy for the government. Aside from the potential impact of tobacco control policies such as excise tax, jobs in the tobacco industry have been declining in recent decades due to new technology, changes in demand, and national and international tobacco control policies targeting consumption. This may significantly impact employment for tobacco growers and workers. Any negative employment impact of the sin tax reform or tobacco control policies in general would occur gradually so there would be time to implement responses, particularly in regions or areas that might be more affected such as top tobacco-producing areas. The responses of the government should also be tailored to the context and needs in each subsector of the industry: in tobacco farming and manufacturing. To maximize gains, the revenue from the sin-tax could be used in pro-poor programs and contribute to the achievement of development goals.

Department of Labor and Employment - Institute for Labor Studies
Authors Keywords
Pacete, Paulina Kim C.; tobacco; tax reform; employment; tobacco industry; excise taxes; job displacement;
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