‘Sin tax’ reform likely to be approved: Abad


Posted at Mar 26 2012 03:29 PM | Updated as of Mar 26 2012 11:29 PM

MANILA, Philippines - Budget Secretary Florencio Abad expressed confidence Congress will pass the measure reforming the country's excise tax system.

Budget and Management Secretary Florencio B. Abad said the government has a better chance to pass the "sin tax reform" bill into law compared to previous attempts.

House Bill 5727, authored by Cavite Representative Joseph Emilio A. Abaya, is currently pending before the House Ways and Means Committee.

"You know, P60 billion, a good chunk of that will go to public health investments," Abad said, referring to the revenue expected to be generated from the bill.

The Department of Finance estimates P60 billion in additional revenues in the first year of the sin tax reform’s implementation. The bulk of these revenues will be allocated for the government's healthcare program.

"So practically, all of those districts will be benefitted by rehabilitating of their hospitals, construction of new health facilities, and coverage of more Philhealth beneficiaries," he said.

The Bureau of Internal Revenue (BIR) has done simulations showing that provinces that have been allocated shares of excise taxes from tobacco farming will be receiving additional from the incremental revenues. The rest of the provinces will also receive additional funding for improved health care services to be financed by the increased collection of excise taxes.

"The congressmen are realizing that this is the direct benefit that their constituents can get from a measure like this, so there really is a direct palpable benefit once it passes," Abad said.

"The alternative is to allow Philip Morris (Fortune Tobacco) to keep all of that money. It's a no-brainer," he added, referring to the country's biggest cigarette company.