JOELYN MARIE G.

GAMBOA
BPS 4-1
MARCH 6, 2014

SIN TAX LAW: ITS RATIONALE AND PROBABILITY TO AFFECT THE YOUTH

Since 2004, there is an existing Sin Tax Law in the status quo contributing to
raising tax collections, but it is widely considered a watered-down law. It came into force
in January 2005. It mandates an increase in the excised tax rate on all brands of
cigarettes and alcohol products every two years. It may have been enough, only that
this mechanism had already been futile because it cannot do its primary function to
prevent smokers and drinkers to from doing their vices excessively. Also, it failed on the
part in which it operates for the growth of the revenue to address the problems/issues in
the health budget insufficiency and service delivery.
House of Representatives proposed a reformed Sin Tax Law, with House Bill No.
5727. After the first reading, the bill was then forwarded to the Upper House, and was
amended by Sen. Franklin Drilon, which then came up to be Senate Bill No. 10351 and
was signed by Pres. Benigno Aquino III on the first day of January 2013 and became
Republic Act 10351.
This reform will allocate the 80% of its collected revenue to the insufficient budget
of health care, given that it had to increase the tax of sin products for up to 260%. This
act is now presumed to be better than the previous one, not only in terms of preventing

people from having excessive vices, but also in addressing the issues in the health
budget insufficiency and service delivery.
The rationale of the ratification of the new Sin Tax Law is to deter consumption of
these so-called sin products by increasing its market price and by generating revenues
from the consumers who are still willing to purchase these commodities. Here are the
theories that will fully substantiate and explain the relationship between the Sin Tax Law
and how it would deter youth's consumption of the aforementioned products.
Causality is a genetic connection of phenomena through which one thing (the
cause) under certain conditions gives rise to, causes something else (the effect). The
essence of this idea is the determination of one event by another. In this respect
causality differs from various other kinds of connection, for example, the simple
temporal sequence of phenomena, of the regularities of accompanying processes.
Causality is an active relationship, a relationship which brings to life something new,
which turns possibility into actuality. A cause is an active and primary thing in relation to
the effect. 1
Sin taxes are typically added to liquor, cigarettes and other non-luxury items. State
governments favor sin taxes because they generate an enormous amount of revenue
and are usually easily accepted by the general public because they are indirect taxes
that only affect those who use the products. When individual states run deficits, the sin
tax is typically one of the first taxes recommended by lawmakers to help fill the budget
gap.2
1The System of Categories in Philosophical Thought The Principle of Causality
(Dialectal Materialism, A. Spirkin)
2 Sin Taxes, Investopedia, 2013

But on the other hand, and more importantly, they believe that higher prices for Sin
Products will eventually prevent people from buying such, especially those in the
marginalized sector, or those part of the society, who, do not have the stable source of
income, simply because, they will not have the factor of affordability of these vices, and
since, they are just vices, necessities of just one or two members of a family per se,
there is a higher propensity that they will spend the money they earned for basic
necessities of the whole family (i.e. food, clothing, shelter, etc.).
The principle of causality then explains that the heightened price of alcoholic
beverages and cigarettes as proposed by the Sin Tax Law in the market (the cause) will
result to higher revenue for health care budget and in the long run, it will become an
effective deterrent on drinking and smoking behaviors among Filipinos especially the
youth (the effects).