Do 'sinners' shift when the sin is taxed? a policy analysis of the 2012 Philippines sin tax on gambling expenditure across income deciles
Date
2023-07-12
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The Philippines ratified the Sin Tax Reform Law, or Republic Act 10351, in
2012, which aimed to increase the allocation of generated taxes directed to Department
of Health’ (DOH) initiatives while decreasing rates of tobacco and alcohol
consumption. In the Philippines, the sin tax is levied on the prices of tobacco goods and
alcoholic beverages sold in the market. In other countries, gambling, or any game of
chance activities, are also included in the said tax; however, this is not practiced in the
Philippines. With this distinction, we hypothesize that an increase in the sin tax
declaration of the government would lead Filipinos to consume more of their income
intended for vices to indulge instead in gambling. Results show that there is no fixed
spending behavior that could embody the populace’s gambling decisions and that it is
more dependent on the household’s disposable income. Although alcohol consumption
decreased across all deciles, this did not imply that there had been a shift in gambling
expenditure for all deciles as well. It is also observed that the majority of the lower-
income deciles tend to decrease their consumption of gambling in contrast to higher-
income earners. While it is not possible to conclusively determine if allocations for vices
immediately translate into increased gambling expenditure across deciles, it is essential
to recognize the significance of policy reconsideration in light of the correlation
between household income and gambling expenses. This provides an avenue for
reframing, in light of recent discussions about reviewing the premises of the sin tax and
what ‘sins’ should be included. The more justifiable identified ‘sins’ the government
gets to recognize, the more accurate and clearer it will be to give a realistic projection
of fund appropriation directed towards public health programs, all the while creating
positive externalities from fostering a culture of healthier living.
Description
Keywords
sin tax, gambling, expenditure, Philippines