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Tax policy key to switching to smoke-free alternatives

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The government should adopt a tax policy that will encourage Filipino smokers who can’t or won’t quit smoke to switch to smoke-free alternatives, according to an executive of Philip Morris Fortune Tobacco Corporation (PMFTC) Inc.

"We believe that such a tax policy is wholly consistent with the principle behind the sin taxes and related initiatives in the past,” said Patrick Muttart, external affairs and communications director of PMFTC.
 
Muttart cited the government’s deliberate policy decision in the TRAIN Law to exempt purely electric vehicles from the excise tax on automobile, with hybrid vehicles enjoying a 50% lower tax rate.

“This tax break was an acknowledgement that electric and hybrid vehicles, which eliminate or reduce combustion, can play a positive role in improving the health and wellbeing of Filipinos," he said. 
 
Muttart spoke during the public hearing on Package 2 of the Comprehensive Tax Reform Program held on September 5, 2019 at the Senate. The hearing, was chaired by Senator Pia S. Cayetano who heads the Senate Committee on Ways and Means. 
 
“There are already more than 225,000 users of smoke-free products in the Philippines. Our company’s research indicates that almost 60% of Filipino smokers are open to switching to smoke-free alternatives—that’s a pool of up to nine million Filipino smokers,” said Muttart. 
 
By switching to smoke-free alternatives such as e-cigarettes and heated tobacco products, smokers fundamentally change their risk profile, according to Muttart.

He cited the Public Health England statement that e-cigarettes are 95% less harmful than cigarettes. He also mentioned the recent decision of the US Food and Drug Administration, after reviewing almost 2 million pages of evidence and examining Philip Morris processes and facilities, to authorize the sale of IQOS in the United States, stating that this is “appropriate for the protection of public health.” 
 
IQOS is the Philip Morris heated tobacco system. At the heart of IQOS are sophisticated electronics that heat specially designed heated tobacco units. IQOS heats the tobacco just enough to release a flavorful nicotine-containing tobacco vapor but without burning the tobacco.

The FDA noted that IQOS produces fewer or lower levels of some toxins than combustible cigarettes. In particular, the agency stated that “the carbon monoxide exposure from IQOS aerosol is comparable to environmental exposure, and levels of acrolein and formaldehyde are 89% to 95% and 66% to 91% lower than from combustible cigarettes, respectively.”
 
The FDA also noted that “IQOS delivers nicotine in levels close to combustible cigarettes suggesting a likelihood that IQOS users may be able to completely transition away from combustible cigarettes and use IQOS exclusively. Available data, while limited, also indicate that few non-tobacco users would be likely to choose to start using IQOS, including the youth.”
 
Countries where consumers have access to smoke-free alternatives are witnessing a precipitous drop in cigarette consumption, said Muttart. 

Sweden is on track to become the world’s first smoke-free country, and its success is due in large part to the widespread availability and popularity of snus, a form of smoke-free oral tobacco. 

In the United Kingdom, arguably the world’s most developed e-vapor market, there are now 2.8 million vapers; from 2011 to 2018 as cigarette consumption in the UK declined by about 1.4 billion sticks per year. 

In Japan, the world’s most developed market for heated tobacco products, cigarette volumes from 2016 to 2018 fell from 179 billion sticks to 133 billion sticks – a drop of 26% in just two years. 
 
“All in all, Philip Morris alone has converted more than 7 million smokers to smoke-free alternatives,” Muttart said. 

He revealed that 92% of the Philip Morris R&D budget is currently spent on researching and developing e-vapor and heated tobacco products. “To date, we’ve spent more than six billion dollars in this area," he said.
 
Muttart stressed that private sector innovation can help government officials and legislators address and eliminate the root cause of smoking-related diseases – smoke. 

“We believe that tax policy can play a meaningful role in driving consumer behavior and we look forward to working with the government in this important area," he said.

He also noted that smoke-free products can help secure the future of the local tobacco industry which, according to the Philippine Tobacco Administration, supports two million Filipinos. 

“Philippine tobacco leaf is already being used in some smoke-free products, and we believe there’s significant potential for the country to become a leading supplier of leaf for smoke-free products," he said.

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