MANILA, Philippines - Philippine lawmakers approved on Monday higher taxes on alcohol and tobacco products, a key measure expected to raise much-needed revenues and boost the country's chances of securing investment grade status.
The passage of the measure simplifying and raising taxes on "sin" products is a boost for President Benigno Aquino's efforts to push through tough legislation. He wants the additional revenues to go towards public health insurance and services.
"This is a significant reform that raises revenues for government's healthcare programs which will expand and strengthen social safety nets for millions of Filipinos," Aquino's spokesman, Edwin Lacierda said in a statement.
The Philippines, one of the most prolific global bond issuers among emerging economies, has been repeatedly told by credit rating agencies to improve tax revenue so it can cut debt levels further and win investment-grade sovereign rating.
However, after compromises to get an agreement, the initial revenues will be well short of the 60 billion pesos ($1.47 billion) the government had originally targetted.
The measure should yield 33.96 billion pesos in extra revenues in 2013; 42.86 billion in 2014; 50.63 billion in 2015; 56.86 billion pesos in 2016; and 64.1 billion in 2017, Senator Franklin Drilon, acting chairman of the Senate Ways and Means Committee told reporters.
The final version mandates a gradual shift in the excise tax on tobacco and alcohol from the current multi-tiered system to two tiers starting in 2013, and to a single rate by 2017.
Starting in 2018, the tax rate will be increased annually by 4 percent.