SOCIAL AND ECONOMIC IMPACT OF EXCISE TAX AND ANTI-SMOKING

REGULATION IN DIGOS CITY

A Thesis
Presented to the Faculty of the Accounting Education
University of Mindanao Digos Campus
Digos City

In Partial Fulfillment of the Requirements for the Degree of

Bachelor of Science in Accountancy

Proponents:

Mendaros, Ronil S.

Obra, Cristel Joy R.

Zapanta, Christian Joshua A.

 CHAPTER I

THE PROBLEM AND ITS SETTINGS

Background of the study

Sin Tax is a tax levied on commodities such as tobacco and alcohol or

activities and services which are seen as vices and considered harmful or

immoral. In principle, the excise tax on sin products is imposed for the

purpose of (1) raising revenues and (2) discouraging the consumption of the

tobacco products and alcoholic beverages (Manasan, et al., 2013). It is

argued that higher excise taxes on tobacco will “induce some smokers to quit,

reduce consumption of continuing smokers, and prevent others from starting”

(Sunley, 2009).

The most common form of "Sin Tax" is tax on cigarettes. Cigarette tax

is popular due to the large number of deaths caused by smoking cigarettes,

as well as the high health care costs. This type of tax was imposed by

government to discourage individuals from involvement in such activities and

to gain revenue for healthcare. When a government run deficits, the Sin Tax is

typically one of the first taxes recommended by lawmakers to help fill the

budget gap as source of government revenue. Because the demand for

cigarettes is relatively price inelastic, the expectation is higher taxes will yield

higher revenues in the near term while deterring smoking in the long run.

In the Aquino administration, the amendment of the Republic Act (R.A)

9334 was certified urgent (Macaraig, 2012). This lead to the enactment of

R.A 10351 “An Act Restructuring the Excise Tax on Alcohol and Tobacco

products” which was implemented on the first day of January of 2013. Prior
to R.A 10351 taxes on sin products follows a multi-tiered system. Macaraig

(2012) asserted that the amendment of the existing excise tax law on tobacco

and alcoholic products is the only revenue measure that the Aquino

administration has certified as urgent to date. In principle, the excise tax on

sin products is imposed for purposes of (a) raising revenues and (b)

discouraging the consumption of the tobacco products and alcoholic

beverages. It is argued that higher excise taxes on tobacco will “induce some

smokers to quit, reduce consumption of continuing smokers, and prevent

others from starting” (Sunley 2009).

In lieu with the revenue goals and the need for reforms in the existing

sin tax law (R.A 9334), R.A 10351 was enacted. R.A 10351 removes the

price/brand classification freeze on the proper tax classification of alcohol and

tabacco product which will be determined every two (2) years. The new law

shifted to unitary taxation to simplify the multi-tiered structure to prevent

downshifting to lower price brands, to discourage consumption of sin

products, and for easy tax administration. Annual indexation of excise tax

rates was introduced to prevent (DOF, 2013).

Tobacco products sold in the Philippines bear both an excise tax and a

value added tax. The excise tax system is tiered rather than uniform, with

some brands bearing a tax that is less than one-tenth of the tax per pack

levied on other brands. The excise tax is applied to cigarettes based on the

net retail price (price less excise and value-added tax). The tax applied to

most brands is based on their net retail price in 1996 rather than based on the

current price. Termed a “price classification freeze,” this has the effect of

widening gaps in prices between brands.

 Cigarette excise taxes in the Philippines account for 24.1% of retail

cigarette prices on average, while total taxes on cigarettes account for 36.1%

of retail prices. This is well below the level of tobacco taxation in countries that

have taken a comprehensive approach to reducing tobacco use, where taxes

account for 70% or more of price. While the specific excise tax rates have

increased over time, the increases have not been enough to maintain the real

price of cigarettes. As a result, cigarette prices in the Philippines are among

the lowest in the world. At the same time, increases in real incomes over

much of the past decade have made cigarettes increasingly affordable.

Extensive research from a growing number of countries has

documented the inverse relationship between cigarette prices and

consumption. The Philippines is no exception. Existing evidence as well as

new estimates produced for this report clearly indicate that falling cigarette

prices lead to increases in cigarette consumption, while rising cigarette prices

will reduce consumption, all else constant. These estimates indicate that a

10% increase in average cigarette prices in the Philippines will lead to about a

5% reduction in cigarette consumption. In addition, both the existing and new

evidence show that rising incomes will lead to significantly more smoking in

the Philippines unless steps are taken to counter the trend.

Additionally, the DOH asserts that the Philippines has an estimated

17.3 million tobacco consumers, the most number of smokers in Southeast

Asia. The Philippines has among the highest smoking prevalence rates in the

world, ranking ninth (9th) for adult males (47.7%) and sixteenth (16th) for

adult females (9%). According to the 2009 Global Adult Tobacco Survey

(GATS) around 17.3 million Filipinos aged 15 years old and over are smokers,
equivalent to an overall adult smoking prevalence of 28.3% (cited in Sta. Ana

III, et al., 2011)

An economic cost of USD 2.86 billion to USD 6.05 billion or PhP

148.47 billion to 314.38 billion (USD 1=PhP53 in 2003) was estimated in

2003. This includes healthcare cost and productivity losses from death and

disease related to four smoking-related diseases. The estimated cost is

equivalent to seven to fifteen times the tobacco tax revenue for that same

year. The same study also revealed that at least 10 Filipinos die every hour

from tobacco-related diseases (WHO, 2003).

Statement of the Problem

The study will radiate and direct about the extent of effectivity of excise

tax and anti-smoking campaign among the smokers in Digos City.

1. What is the profile of respondent in terms of their:

1.1 Sex;

1.2 Age;

1.3 Income and;

1.4 Occupational status?

2.What are the impact of cigarettes taxes on smoking behavior in terms of:

2.1Prevalence and Smoking history;

2.2Cigarettes consumption pattern;

2.3Pictorial Warnings and Awareness of Anti-smoking campaign

and;

2.4Perceptions and Attitudes?

 3.Is there any major connection in focusing to the study entitled the social

and economic impact of excise tax and anti-smoking regulation among the

smokers in when they are analyzed by profile?

Hypothesis of the study

The null hypothesis of the study will be tested at 0.05 level of

significance:

Ho. There is no significance relationship between social and economic

impact of excise tax and anti-smoking regulation among the smokers Digos.

Review of Related Literature

To give over the researchers’ sufficient and ample background and

framework of the search, preferred materials related to the study are obtained

on this part. The researchers supporting related literature to follow through the

pursuit made and originate by the researchers study. This is to relate the topic

in many on paper literature both in the books and online resources.

Impact of cigarettes taxes on smoking behavior

Cigarette taxation is undoubtedly one of the most effective methods to

combat smoking behavior. Higher tobacco taxes, translated into higher real

cigarette prices, will lead to a decline in smoking prevalence (by reducing

smoking initiation and increasing smoking cessation), reduced cigarette

consumption among those who continue to smoke even after the price

increase. Research indicates that the price elasticity of demand for cigarettes

in high-income countries is, on average, -0.4% among adults (Chaloupka et

al, 2000). This means that when prices increase by 10%, total consumption of

cigarettes decreases by 4%. An even larger effect can be expected among

countries and socio-economic groups with lower levels of income, and among

youth (Chaloupka et al, 2000). Particularly for established smokers, the effect

of a permanent increase in price will be greater in the long run than in the

short-run, because it takes longer for a person addicted to nicotine to change

his/her behaviour (Chaloupka, 1991). The impact of a cigarette tax change will

depend on how it translates into the final cigarette prices, on the cigarette

prices relative to other goods, the size of the tax change relative to the initial

price, the average income of the smoking population, and on the price of a

close substitute e.g. price of tobacco used for roll-your-own (RYO) cigarettes.

For a cigarette tax to have a sizable effect on smoking rates, it should be

sufficiently large and impact final cigarette prices so it will have a significant

impact on the consumer budget. However, the impact of higher cigarette

taxes can be reduced if taxes on cigarette substitutes do not follow the same

trend, because some cigarette smokers will be motivated to switch to the RYO

cigarettes (Paersch, 2003). Empirical evidence shows that higher taxes will

reduce cigarette consumption even under the presence of cigarette smuggling

(Merriman, 2000).

The relatively low responsiveness of the market to change in cigarette

price (i.e. low price elasticity of cigarette demand) implies that a tax increase

will lead to higher tax revenue. Research evidence has supported that

contention in many countries (Townsend, 1998). A mathematical model of tax

revenue and price elasticity (Merriman, 2002) shows that in a country like

Malaysia where cigarette tax represent about 30% of the final price, 1% of tax

increase will lead to 0.58% to 0.97% revenue increase for price elasticity

ranging from -1.4 to -0.1. There are numerous studies focusing on price
elasticity of cigarette demand in developing countries. However, only few low

and middle-income countries have their country specific estimates of price

responsiveness of the cigarette market. The lack of data and/or research

capacity is often the reason why this information is not available. A study from

South Africa (Van Walbeek, 2000) used time-series data on cigarette

consumption (expressed in millions of packs per year), real cigarette prices for

the period 1970 to 1998, controlling for real personal disposable income and

the population size. The regression equation is estimated using the Engle-

Granger (EG) two-step procedure (Engle and Granger, 1987) and a linear

functional form. In the first step the author estimates a long-run equation,

where the data are in levels. In order to avoid spurious regression, the

resulting residuals are tested for stationarity. The second step estimates the

error-correction model (ECM), based on the long-run co-integrating

relationship (Engle and Granger, 1987). Results indicate that cigarette prices

are an important determinant of cigarette consumption and that the price

elasticity changed during the 29 years analyzed by this study. The price

elasticity decreased significantly during the 1970s and 1980s, due to the

decrease in the real price of cigarettes. However, since the early 1990s the

price elasticity increased from around -0.4 to its current levels of around -1.0.

The study also investigated the impact of excise changes on consumption and

total government revenue. The analysis shows that the government can

increase its revenues from tobacco taxes by at least an additional R 300

million5 if the government were to increase the tax to 50% of the retail price.

Such tax increase would decrease cigarette consumption by nearly 30%.

Sex
 Smoking is much more prevalent amongst men than amongst women.

Male and female smoking prevalence in 1996 were 49.2% and 3.5%,

respectively. Although the national surveys showed a reduction in female

smoking rates from 4% in 1986 to 3.5% in 1996, World Tobacco Market File

(2000) estimated that there was in fact a rise in the number of female smokers

(from 4% in 1985 to 5% in 1995). This source also predicted that smoking

amongst Malaysian females would rise further in the coming years.

Daily smoking (6.1%) was found to be higher for males (10.0%) them

among females (2.6%), and the amount of ex-smokers (7.5%) was higher

them smokers. Only 0.2% of those surveyed reported use of smokeless

(chewing) tobacco. One-third of ever-smokers reported having started

smoking daily before age 18. Nicotine dependence levels were classified as

very low or low in 83.6% of the smokers. Daily smoking prevalence increased

with age, and was higher in rural areas and among individuals with no formal

education, lower incomes, and alcohol consumption. This population

presented a low smoking prevalence, along with a low number of daily

smoked cigarettes and low levels of nicotine dependency, despite the low

prices of, and easy access to, manufactured cigarettes. These two factors

conjugated with the current absence of an Angolan policy for tobacco control,

enhance the susceptibility for rising overall tobacco use in the near future.

(Pedro et. al 2017)

For tobacco consumption, this study determined that male adolescents

who were not studying were expected to consume tobacco more than their

peers who were female and studying. A global survey showed that male
adolescents were more inclined to smoke; this result is similar to our finding.

Previous studies revealed that current education status was associated with

tobacco consumption among adolescents. We determined that adolescents

who were not studying were inclined to smoke from 2004 to 2011. Previous

research showed that family intervention based on brief physician intervention

were effective in preventing smoking among adolescents. Thus, family

interventions should be considered for adolescents who were not in school.

Web-based interventions can be effectively delivered to different populations,

including adolescents who are highly receptive to Internet-based information.

Therefore, more Internet-based interventions can be considered in the future.

However, based on a survey in Jiangsu Province, China, many smokers were

college students. Approximately 29% of a past study’s sample (49% males

and 5% females) reported smoking in the past 30 days. This finding indicated

that smokers started smoking for the first time after high school and before

college. (Chen et. al 2018)

Age

The majority of current smokers became addicted during their teenage

years. Youth typically underestimate the risk of addiction and the health

consequences of smoking (Kessler, 1995). In addition, the average age of

smoking uptake seems to be falling, particularly in developing countries where

cigarettes became a symbol of modern lifestyle (Gajalakshmi et al., 2000;

Efroymson et al., 2001).

In Malaysia Smoking prevalence is increasing. In 1996, 24.8% out of

32,991 participants (18 years of age and older) in a National Health and

Morbidity Survey identified themselves as smokers (NHMS, 1996). The same

survey carried out in 1986, but looking at population 15 years of age and

older, showed prevalence rate of 21.5 % (NHMS, 1986).

Youth smoking is an acute problem in Malaysia. The Ministry of Health

estimates that the smoking rates amongst adolescent boys and girls, aged 12

to 19, are 30.7% and 4.8%, respectively (Rosemawathi, 2000). However,

there are studies which have found smoking rates amongst Malaysian youth

ranging from 30% to 60% (Zulkifli, 1997).

The average cigarette consumption by youth is lower than the general

average. The 1999 Adolescent Reproductive Health Survey showed that

youth smokers from 15 to 24 years old consumed, on average, 8 cigarettes

daily (Demographic Institute 1999). Although the quantity of cigarettes

consumed by youth smokers is lower than that consumed by smokers in

general, their long-term health hazards are great. A study conducted by

Anwar et al. (1993) showed that the earlier the age of starting smoking, the

greater the risk of developing lung cancer. Those who started smoking before

the age of 15 had a risk of getting lung cancer as much as 22 times higher

than non-smokers. Those who started smoking between the ages of 20 and

24 had a 7.5 times greater risk of getting lung cancer.

Income

People on low incomes are much more likely than people on high

incomes to cease smoking as prices rise and will therefore reap health gains

large enough to neutralize concerns about regression (McCord et al. 2018).

Much remains to be learn in research is required across the developing world

to estimate optimal taxes according to local tobacco markets, health system

costs, and people's discount rates of the future costs of smoking. Also,
cigarette taxes are often part of an anti-tobacco policy package, potentially

confounding the estimated effects of tax increases on demand. Finally, taxes

should be designed to minimize switching to cheaper (perhaps unhealthier)

types of tobacco, and to prevent illegal tax avoidance. Tobacco use remains a

leading cause of premature mortality worldwide, its health consequences are

disproportionally on people on low incomes, and tobacco production and use

creates substantial adverse global environmental impacts. Public health

professionals advocate for total abstinence from tobacco use and view high

excise taxes primarily as a public health intervention and not a government

revenue tool.

We combined the 2006 through 2011 National Surveys on Drug Use

and Health to compare the prevalence and patterns of other tobacco use

(cigar, snuff, and chewing tobacco) between current and former cigarette

smokers by income level. Other tobacco use was minimal among females and

among male nonsmokers. Approximately a third of both current and former

male cigarette smokers reported past-year other tobacco use. Overall, current

smokers were more likely than former smokers to have used cigars (adjusted

odds ratio (AOR) 1.69, 95% CI 1.50-1.92) or snuff (AOR 1.14, 95% CI 1.01-

1.28) in the past year. The association of smoking status with other tobacco

use differed by income level (interaction term p-value <0.001). Among lower

income groups, current smokers were more likely to use cigars and snuff

compared to former smokers. Among the highest income group, former

smokers were just as likely to use smokeless tobacco as current smokers.

The differing patterns of use of other tobacco between current and former

smokers by income level highlight a need for studies to understand the

motivations for the use of these products and their role in smoking cessation.

(News Reporter-Staff/News Editor of Health & Medicine Week 2015)

Occupational Status

Smokers are found out to be educated. It revealed that 54% of

smokers belongs to 7-10 years of schooling, followed by 11 and above.

People who live in urban areas are mostly cigarette smokers (62.2%),

compared to people living in the rural areas (37.8%). Urban people have

more lazy time and lack of employment are the suggested reasons for them

to be more smokers (Aguillon and Romano, 2012).

The results show that cigarette affordability was higher among those

with a high level of education. This finding is consistent with the results of

Nargis et al., which showed that smokers in higher socioeconomic status

(SES) demonstrated greater affordability of cigarettes than those with lower

SES. Furthermore, although cigarettes were more affordable for smokers with

a high level of education, they tended to smoke fewer cigarettes. This finding

may be explained by better knowledge and perception of health risks

associated with smoking among smokers with a high level of education, which

in turn could boost their self-efficacy to resist the urge to smoke. (Hu et. al

2019)

At the bivariable level, poorer households, those headed by a person

with a lower level of education, and those headed by a person with a lower

occupational status (such as blue collar, service or administrative compared

with managerial or professional occupations) had a higher probability of being

a smoking household according to the study of Siahpush et. al (2018). For

example, while 22.1% of households below poverty reported cigarette

expenditure, only 13.2% of those at or above 300% of poverty threshold did

so. Similarly, while the percentage of smoking households was 22.6% among

households headed by a person who did not complete high school, that

percentage was only 8.2% among households headed by a college graduate.

Furthermore, while 25.5% of household headed by a blue-collar person

reported cigarette expenditure, only 11.7% of those headed by a person in a

managerial or professional occupation did so. Bivariable results also provide

strong evidence that poorer households, those headed by a person with a

lower level of education or lower occupational status had a higher percentage

of their total expenditure devoted to cigarette expenditure.

Prevalence and Smoking history

According to the News Reporter-Staff News Editor of Obesity, Fitness

& Wellness Week (2018) stated that the results on Life Science Research

would give an update as to the interpretation of the relationship between

excise taxes and the prevalence of cigarette smoking in the United States.

The linear mixed-effects models were used in the study to show the

relationship between excise taxes and the prevalence of cigarette smoking in

each domain from 2001 to 2015. One of the news journalists of Obesity,

Fitness & Wellness Week, acquired an excerpt from the University of

Pittsburgh Medical Center stating that the increase in state-level excise taxes

is one of the causes of the decrease in the prevalence of cigarette smoking.

And where the effect of the increase in excise tax strongly affects young

adults from the age of 18 to 24 and low-income individuals on the weakest

part with an income of less than $25,000. The decline in the number of

smokers is the result of a useful tool, which is the increase in excise tax.
 The results showed the comparison of daily and non-daily smoking,

where state tobacco tax indicated to have an inverse relation with daily

smoking. And also where hospitality bans also have an inverse relationship

with both daily and non-daily smoking, as shown by the study of Ballester,

Auchincloss et al. (2017). Accordingly, the reduction in the percentage point of

non-daily and daily smoking with -0.12 and -0.18 respectively was the result of

an equal level of cigarette taxes and prices and the presence of bans. The

presence of bans appeared to have favorably affected the inverse relationship

between cigarette taxes and daily smoking; however, it did not affect the

relationship of non-daily smoking. An example shows where the decrease in

the prevalence of daily smokers in areas without smoking bans and areas with

smoking bans by -0.28 and - 0.53 respectively are from the increase of $1 of

the cigarette tax.

The implementation of tobacco control strategy (2002-2012), appears

to have decreased the young smoker in Canada in both smoking prevalence

and mean smoking frequency. The results show that there is a slight impact

on the changes in excise cigarette tax levels in young smokers at this time,

according to Manivong et al. (2017). This study does not indicate to increase

the excise cigarette taxes for tobacco consumption to decrease. However, this

study shows the existence of a decrease in the prevalence of smoking even in

the locality with stable cigarette tax levels, and it advises to consider those

policies in other areas principally those localities with stringent smokefree

policy, to have a substantial effect in the use of tobacco.

Cigarettes consumption pattern

 Choi et al. (2016) studied the differences as to the effect of an increase

or decrease of cigarette price as a result of tax increase in various income

classes in Korea using the individual level cigarette consumption data from

the KHNNES. It appears that the individual in the lower-income class is more

sensitive in a price increase. Also, the study shows the decrease in

consumption to those smokers in the lower-income class at a rate of 2.5 times

greater than smokers in the upper-income class. And it is consistent with the

study of other high-income countries as to the cigarette tax and cigarette price

increase, which would result and dramatically affects the health outcomes of

the most impoverished Koreans.

Ngo et al. (2019) studied the effect of taxation on cigarette

consumption accompanying gender differences. The study shows a high

consumption rate for both males and females with the use of tiered tax

structures. It further provides that female smokers are more sensitive than

male smokers in terms of a tax increase on a cigarette, which indicate that a

useful tool of decreasing the consumption rate of cigarette among females.

Hence, the use of a simplified tax structure would be more favorable. The

study also shows the tax elasticity of cigarette consumption among females is

on average -0.3, wherein opposite males are not quite sensitive to increasing

taxes.

Pierce et al. (2018) used the data from self-report in repeated national

crosssectional surveys indicating that the cigarette sales and individual

consumption declined in the USA from 1985 to 2015, and where the decline in

California was fast before 2000, but reduced afterward. Accordingly, an

increase of $1 in the cigarette tax reduces the consumption rate by 4.8

packs/adult/year. The decrease in consumption by 8.0 is a result of an

increase in the part of smokers with smoke-free homes with 5%.

Pictorial Warnings and Awareness of Anti-smoking campaign

Jin et al. (2015) used market-based behavior in the conduct of

retrospective and prospective benefit-cost analysis in the smoking policy of

the U.S. The statistics show that retrospective benefit-cost analysis from 1964

to 2010 indicated the decrease in cigarette consumption due to the

implementation of anti-smoking policies. The study provides that prospective

benefit-cost analysis for future Food and Drug regulations may produce

supplementary consumer benefits; however, it determines the consumer

benefits for future regulations may be smaller than the past anti-smoking

policies. And there is uncertainty in some of the forthcoming Food and Drug

regulations to produce positive benefits.

Most Indians believe the selling of loose cigarette makes it hard for

smokers to quit and the statics shows that 59% of Indians thinks that banning

the sales of loose cigarettes will change the smoking behavior of an

individual. Accordingly, 69% of Indians exposed the falseness of warning

images on cigarette packs on changing the smoking behavior of an individual

(DQ Channels, 2017).

Bennett et al. (2017) asserted that with the implementation of stringent

smoking policies could change the smoking behavior of an individual and the

decrease of smoking frequency, reduced exposure to second-hand smoke,

and a reduction in prosmoking attitudes are the result of implementing the

tobacco-free and smoke-free policies. The implementation of smoke-free

policies on the campus guaranteed the decrease of the smoker and the

attempt to quit smoking. The evidence used is the foot of cigarettes on the

campus.

Perceptions and Attitudes

Ammendolia, Carlo, et al. (2016) used intervention mapping and

collaborated with a workplace partner with the goal to reduce presenteeism by

improving their current health promotion and wellness program. The

intervention mapping process explicitly outlined strengths and weakness of

the current program, delineated allimportant stakeholders and prioritized

important health conditions that impact presenteeism. A detailed description

of the necessary change and learned objectives that are required for each

stakeholder for each priority health condition provided the framework to

develop new and improved current strategies to accomplish these objectives.

The final product was a document that outlined specific action plans to be

incorporated into the current program. However, the main benefit of this study

was the intervention mapping process that brought together a broad spectrum

of stakeholders who worked together to critically appraise (self-assessment)

the current program and to develop potential solutions to improve the

program. The process compelled participants to think critically and

collaboratively and often-in non-traditional ways. It is this process that leads to

innovation, and it is innovation that will lead to excellence in this field.

The aim of this research was to investigate the effectiveness of WHP

under the counseling of Workplace Health Promotion and Tobacco Control

Centers in three regions in Taiwan. By comparing the differences between the

intervention group and the control group, the promotion of workplace health

by three regional counseling centers was found to be effective in raising the

business entities’ awareness, announcing the regulations, and improving

employees’ health and working environment quality. (Chen et al. 2016)

Verguet et al. (2017) studied the distributional impact of expanding two

tobacco control policies, aggressive increase in the excise tax on tobacco

products and enforcement of workplace smoking bans, in China. On the one

hand, excise tax hike passed onto the consumer in the form of a 75% retail

price increase would prevent 24 million premature deaths (about 2% of

China’s population) and 9 million cases of poverty, and yield an annual US$

47 billion more in revenues. China’s poorest would experience the greatest

benefits in averted deaths and impoverishments while bearing a smaller

burden of the tax hike. On the other hand, instituting workplace smoking bans

would have a more moderate impact on mortality and impoverishment

averted. Assuming a relative decrease in smoking prevalence of 9%, 12

million premature deaths (or 1% of the Chinese population) and 4 million

poverty cases could be averted, while revenues would decrease.

Theoretical and Conceptual Framework

Law of Demand and Supply

Tobacco taxes that translate into price increases are widely considered

the single most effective option for reducing tobacco use. Significant

increases in taxes that raise the prices of tobacco products will reduce their

consumption, while at the same time generating substantial increases in

revenues. The Philippines imposes a variety of taxes on tobacco products,

including excise taxes on cigarettes and other tobacco products, duties on

imported tobacco products, and a value added tax on the excise tax-inclusive

retail prices of tobacco products. The National Internal Revenue Code (or the

Tax Code) enacted in 1939, among its many provisions, sets policy pertaining

to tax rates and tax administration in the Philippines. It covers the imposition

of excise and value-added taxes on certain goods, properties, and services,

including tobacco products.

Snow don (2012) argued that taxing goods which are price inelastic,

especially those which are addictive, is far more likely to impoverish

consumers than it turns them into abstainers. On the same study, he

continually discussed that there is evidence that tobacco/ cigarette taxes are

now so high and their continuing increase will yield diminishing returns. Such

levies are better seen as stealth taxes than sin taxes. This argument is

parallel made by Sunley (2009) that higher excise taxes on tobacco will

induce some smokers to quit, reduce consumption of continuing smokers and

will prevent others from starting.

The theory of the law of demand and supply by Paris (2007) as stated

by Deluna et al. (2015) in their study that consumer assumes that price is the

most important influence on the amount of good purchase. But there are

factors and do affect the purchase, and these factors called determinants of

demand. One of the determinants of demand is the Tastes and Preferences

change and are also affected by advertising, trends, health considerations,

etc. Another determinant is income, and people’s income rises demand for

goods and services rise too. Goods that obey this rule are called Normal

Goods. However, the exception to this is an inferior good. Demand for inferior
goods will fall as income rises. The distribution of incomes will affect too.

Expectations of future price changes people expected prices to rise shortly;

they will try to beat the increase by buying early and vice versa. Population

size and make-up of the population affect demand. If there is a growing

population, better is demanded. If the community is stable but is aging, things

that older adults need will increase in demand - i.e., health care. The ultimate

determinant of demand is the price of related goods. Complement goods as

the price of complements rise, demand for the supplement falls, and so too

will demand. Substitute goods the higher the price of substitute goods, the

higher the demand will be for this good.

Many studies have employed aggregate data to examine the impact of

cigarette and other tobacco product taxes and prices on overall tobacco use.

Before 2000, nearly all of these studies came from high-income countries

including the United States, Canada, the United Kingdom, Australia, and

several others. These studies consistently find that increases in taxes and

prices on tobacco products lead to reductions in tobacco use. Most studies

have focused on cigarette smoking, given that cigarettes account for the

nearly all tobacco use in high-income countries. While these studies have

produced a wide range of estimates of the magnitude of the effects of price on

overall cigarette consumption, the vast majority of these studies estimate

price elasticities in the range from –0.25 to –0.5, with most of these clustered

around –0.4,suggesting that a 10% increase in (real) cigarette prices will, on

average, bring about a 4% reduction in consumption .

Figure 1 shows the conceptual framework of the study wherein the two

boxes below represents the variables of the study. The independent variable
is the profile of the respondents and the dependent variable is the impact of

cigarettes taxes on smoking behavior. The arrow implies that there is no

relationship between the two variables, which means that they still smoke

regardless of their sex, age, income or occupational status.

Independent Variable Dependent Variable

Profile of the Respondent Impact of cigarettes taxes on
smoking behavior in terms of:
 Sex
 Age  Prevalence and Smoking
 Income history
 Occupational status  Cigarettes consumption
pattern
 Pictorial Warnings and
Awareness of Anti-smoking
campaign
 Perceptions and Attitudes

Figure 1. Conceptual Framework Showing the Variable of the Study

Significance of the study

The result and upshot of the research is obliging and positive to the

succeeding:

Government. According to their proposed law it would help them

reduce the consumer of cigarettes and at the same time it would raise their

funds. This study may provide an information that could help them identify if

their law is effectively implemented.

Faculty and Staff. The result of the study would help them to continue,

inform and share their knowledge the extent of cigarette smoking among the

accounting students in UM Digos College.

Student. The result of the study would give illuminating and inspiring

proceed to the students on how the extent of cigarette smoking among the

accounting students in UM Digos College.

Future Researchers. The construct researchers study would be an

auxiliary and advocate file for future research or study.

Scope and limitation

 The study was partial and series to the students, faculty and staff, and

future researches, as the study is test the extent of cigarette smoking among

the accounting students in UM Digos College.

Definitions of terms

Smoking Behavior. Smoking behavior is a variable and can change

depending on the circumstance or day (Baker E., Webb Hooper M. (2013).

In this study, the term refers to the prevalence and smoking history,

Cigarettes consumption pattern, Pictorial Warnings and Awareness of Anti-

smoking campaign and Perceptions and Attitudes

 CHAPTER II

METHOD

This chapter reviews the research design of the study, research

methods, research instruments, descriptive and the tools used in the study.

Research Design

The predictive-correlational research design will be use for this study.

Predictive correlational studies predict the variance of one or more variables

based on the variance of another variables. In addition, the use of this method

is to determine the impact of cigarettes taxes on smoking behavior in terms of

prevalence and smoking history, cigarettes consumption pattern, pictorial

warnings and awareness of anti-smoking campaign and perceptions and

attitudes.

The researchers used the quantitative research as a method in

conducting a study for the accurate and relevant answer they wanted to come

up in the study itself.

Quantitative research is a systematic empirical investigation of

quantitative properties and phenomena and their relationships. Asking a

narrow question and collecting numerical data to analyze

utilizing statistical methods. The quantitative research designs are

experimental, co-relational, and survey. Statistics derived from quantitative

research can be used to establish the existence of associative or causal

relationships between variables. Quantitative research is linked with the

philosophical and theoretical stance of positivism. The Quantitative data

collection methods rely on random sampling and structured data collection

instruments that fit diverse experiences into predetermined response

categories.

Research Instruments

The researchers adopted a questionnaire by Deluna and Maneja

(2015) consisted of two (2) sections. The first section includes the profile of

the respondents in terms of sex, age, income and occupational status. The

second section includes the impact of cigarettes taxes on smoking behavior in

terms of prevalence and smoking history, cigarettes consumption pattern,

pictorial warnings and awareness of anti-smoking campaign and perceptions

and attitudes. The dependent and independent variable will be determined by

answering yes or no questions.

Data Gathering Procedure

The following procedure will be exercised in the process of gathering the

necessary data for the study.

1. Asking Permission for Conducting Survey. Earlier to the

collection and conducting survey, permission was already secured

to the VP of UM Digos College with regards in writing with the

researchers’ will to conduct the research study. Same letter was

used as an endorsement recommendation to the department chair

of the said college department.

2. Identifying Respondents and Conducting Personal Survey.

After the permission was granted in the will of conducting survey

the researchers identify the respondents which are the active

smokers in Digos and to conduct its personal survey.

 3. Data Analysis. After all the questionnaires were gradually

answered, gathered data were encoded, tallied, summarized and

treated with statistical tools.

4. Draw out the Conclusions and Recommendations. With the aid

of the research adviser, research statistician, appropriate

conclusions and recommendations were drawn and tensed to

address the problems posed by the study.

Statistical Treatment

Logistic Regression is the appropriate regression analysis to conduct

when the dependent variable is dichotomous (binary).  The logistic regression

is a predictive analysis.  It is used to describe data and to explain the

relationship between one dependent binary variable and one or more nominal,

ordinal, interval or ratio-level independent variables. It provides the extent to

which a criterion behavior pattern can be predicted and evidences about the

predictive validity.
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