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| Big business heart small business... how touching! |
What could the CEO of British American Tobacco Philippines be up to in calling for higher ‘sin’ taxes? To read his concern for the smaller tobacco firms is so touching, but also unbelievable.
I’m sure James Lafferty is a cool guy, but who is he fooling with his Rappler article in support of legislation for further raising of taxes on alcohol and tobacco products?
1. FINANCES
Lafferty makes the rather obvious point that higher taxes would make for more revenue (but let’s not forget the Laffer curve).
But so what? In the first place, is there any legitimate reason for expropriating such money in the first place? This is the problem with accepting the premise that taxation is justifiable at all, when it isn’t. It’s theft dressed up in legislation. If taxation was just, then this justifies 100% expropriation if Congress says so.
2. HEALTH
Higher taxes make for healthier choices? Contrary to what Lafferty says, such a statement is not a “no-brainer.” Perhaps a particular taxed product would be consumed less, but this can easily make for more insalubrious, risky alternatives, including dangerous drugs and less known products with even lower production standards.
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| You mean he cares about my health? How touching! |
And higher prices do not necessarily mean cutting down on a product, since consumers may simply rearrange their priorities, which is more adverse to the poor.
You don’t tax your way to health; you educate and be an example.
3. LEVEL PLAYING FIELD
Lafferty laments the preferential tax treatment given to pre-1997 brands. Instead of extending such an exemption to all products, he wants an across-the-board tax increase!
[Warning: Hitler reference up ahead] And so I guess the problem with Hitler is he didn’t kill non-Jews as well!
And if that’s not enough, he (Lafferty, not Hitler) twists the pre-1997 provision to be anti-small business to be rectified as he sees fit.
In fact, raising taxes, even with removed privileges of older established producers, means a tougher time for the small guys to recoup costs. Bigger businesses like compassionate Lafferty’s are better able to cope with such intrusions. Of course Lafferty, already a beneficiary of the pre-1997 provision, will welcome sin tax ‘reform,’ which actually adds to big business’ privileges!
4. SMUGGLING
Lafferty awards this aspect against the ‘reform’ position, but he is still mistaken in his premise of smuggling being bad at all, as opposed to being a natural market reaction to government restrictions. Whether smuggling increases or not from higher taxes (it will), expect a change in preferences of consumers, not necessarily for their health or economic well-being.
5. TOBACCO FARMERS
Lafferty says that 60% of local tobacco is already exported. But really, high or low exports, who cares? Does this mean that there won’t be pressure on local employment of farmers?
Lafferty earlier made the false claim that more small companies will be able to enter the industry, and thus do more business with farmers. But as I pointed out in #3, the higher taxes will hurt smaller firms to the advantage of British American Tobacco and other big guys.
CONCLUSION
Competition and entry of smaller players is not arrived at by further taxes and government oppression, but by eliminating privileges enjoyed by big business, so as to make exemptions all-encompassing.
So yes, I agree with Lafferty that there is a need for reform ― in the sense that taxes should be reduced to the utmost, if not abolished.
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