Background The five-year old Philippine Sin Tax Law (RA10351) is recognized as a global model. With the upcoming Congressional review,which can be a venue to either weaken or proactively improve the law, it iscrucial to analyze its current and future impact on cigarette affordability, or the strength of income in purchasing tobacco products. This paper therefore analyzes trends in nominal cigarette prices (average price jumped fromP1.20 to P2.20/stick according to the Philippine Statistics Authority (PSA) data))and income trends to determine the future trajectory of cigarette demand. The upward trend inboth individual (3% annual increase) and macro-economic level income (7% annualincrease) of Filipinos could eventually make smoking behavior affordable again.Methods Trends in (i) Gross Domestic Product per capita,(ii) household income from Family Income and Expenditure Survey, (iii) and nationaleffective minimum wage calculated from the National Wages and ProductivityCommission, are used to estimate measures of cigarette affordability. Pricedata were gathered from PSA and projected using Walbeek model.Results After the passage of Sin Tax Law, cigarette Relative Income Price increased from 2.2%in 2012 to 2.9% in 2017Q1. However, with strong projections on GDP growth andthe relatively low increase in price starting 2018 (4% increase in excise tax),RIP will lower to 2.8% in 2018. This is consistent with the estimates that thegrowth of cigarette prices would be slower than daily income by 2018, making smokers potentially adaptable again.Conclusions Moving forward, the paper proposes to sustain the declining trend in cigarette affordability through increasingtobacco excise taxes further. This is consistent with the call of various health experts including Department of Health call to reduce smokers by 1 million by 2022.Other countries seeking to emulate Sin Tax Law arealso recommended to consider income growth in estimating appropriate tax levels.
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