Uniform Cigarette Tax Rates Seen to Burden Consumers

Question 1. Is the proposed sales tax progressive or regressive? Who will be

burdened most and why?

The current proposals in the Senate that cigarette industries must have the rate

of taxation that are uniform or is not progressive but remains the same proportion in all

amount. Therefore, in terms of whether the sales tax progressive or regressive in the

year it was adopted. It is regressive. It’ll boost the other business firms too to kick in and

having considerable proficient to compete with leading firms. It’ll be a burden to the

manufacturers of native cigarettes because they’ll be facing with the same tax rates as

so with the leading manufacturers of non-native cigarettes.

Question 2. Will there be substitution between brands? Why?

With the numbers of Filipino people who are smoking and with the low cost of

leading cigarette manufacturers that’ll match the price of the non-leading manufacturers

there will be no substitution exist. Why? It is because if we considered the current

situation of the excise tax for Tabaco in the Philippines which is there is a higher tax of

tobacco but Filipino smokers seems to be undaunted and tobacco industries still remain

for seeing that there is still a high rate of demand despites the rising taxes they must

pay. Therefore, there is no substitution and consumers will remain to their chosen

cigarette brands.
 Beer Sales on Downtrend, Taxes Blamed

Question1. Is the demand for beer price elastic or inelastic? Explain and

illustrate.

An elastic demand or elastic supply is one in which the elasticity is greater than

one, indicating a high in responsiveness to changes in price while an inelasticity of

demand or inelastic supply is one, indicating low responsiveness to price changes.

Therefore, with regards to the case situation whether the demand for beer price is

elastic or inelastic, it is inelastic because the firms is facing sales downtrend, because

even the price was still consistent and demand of consumers was still consistent same

price, but the taxation was continue raised up which brought to economic failure to the

firm and with making the firm to compete with their losses they must need to be on a

high risk of response to their supply in relation to the change of the product’s price to

accumulate their edge of crises economically.

Question 2. What factors influence this elasticity?

There are certain things that will affect this elasticity such as: the availability of

substitutes, income level, level of price, postponement of consumption, number of uses,

shares in total expenditures, time period and etc.

Question 3. Is specific tax a better alternative to raise tax revenue? Explain.

One clear alternative to taxation as a means of increasing government revenue is

for government to spend less. In short term, it has same effect on the balance sheet as

increasing revenues. In the long term, it has a significantly better impact that does

increasing taxes.