Cigarette prices in the Philippines are among the cheapest in the world.  But a new study shows how the yosi has become even cheaper and more affordable.

The Affordability Study, authored by Filomeno Sta. Ana III of Action for Economic Reforms and Jo-Ann Latuja of HealthJustice, shows that cigarettes remain extremely affordable.

“Due to the insufficient tobacco tax increase, majority of the cigarettes consumed have become cheaper relative to other commodities. While food prices have increased by 59% from 1999 to 2009,), tobacco prices only increased by 34% during the same period.  A stick of yosi is cheaper than an egg, or pandesal—it’s about the same price as kwek kwek,” exclaimed Latuja, referring to the Pinoy delicacy made of quail eggs and some orange batter, also known as “tukneneng.”

According to the authors, the current cigarette excise tax system is the main reason that explains the affordability of cigarettes.  They note two problems, namely the price classification freeze that pegged the price groups of majority of the cigarettes to their 1996 net retail prices (NRP) and the absence of indexing the taxes to inflation.

“The basis used for the taxes is almost two decades old. Tobacco should be taxed according to the current NRP,” said Sta.  Ana. “Furthermore, the absence of automatic indexation to inflation erodes the real price of tobacco products, hence making them more affordable,” said Mr. Sta. Ana.

To complete the tobacco tax reforms, Sta. Ana stressed that the tobacco tax system be made simple by adopting a unitary tax for all cigarette brands, regardless of their prices. ”The current system is multi-tiered. This creates a huge price gap between the more expensive brands and the cheaper ones. The result — smokers of higher-priced brands just shift to the cheaper cigarettes,” he said.

Both authors said that they strongly recommend a tax reform that will have a unitary tax structure, and will peg taxes to current NRP by removing the price freeze and indexing the taxes on inflation or nominal GDP growth.

“What we have is a highly addictive product that can be purchased at an extremely low price—it’s a deadly combination. Because it’s so cheap, yosi is more attractive to consumers who have little money to spare. And who are they? They are mainly the poor and the kids who become suki to these affordable death sticks,” Sta. Ana warned.

“Various studies have shown that an increase in cigarette prices effectively reduces smoking, especially among the youth,” said Latuja. “By enacting the right tobacco tax measures like increasing the tax, rate, indexing the tax to inflation, adopting a unitary tax, government, and removing the price classification freeze, the government will be able to protect our kids from yosi.” she said.