No compromise on sin tax revenues - Drilon

By Marvin Sy, The Philippine Star

Posted at Nov 10 2012 08:15 AM | Updated as of Nov 11 2012 08:00 PM

MANILA, Philippines - The Senate is expected to vote on the so-called sin tax bill on Nov. 19 and as far as the sponsor of the measure, Sen. Franklin Drilon, is concerned, there will be no compromise on the minimum P40 billion in expected revenues.

Under the version of the sin tax bill sponsored by Drilon as acting chairman of the ways and means committee, between P40 billion to P45 billion in incremental revenues would be generated with the adjustments in the excise tax rates on tobacco and alcohol products.

This was significantly higher than the P15 billion to P20 billion range of Sen. Ralph Recto in the version he endorsed when he was still chairman of the committee and even the P31 billion expected from the version approved by the House of Representatives.

“P40 billion is the minimum because in the 2013 budget that we will approve before the year ends, the health sector needs an additional P23 billion, particularly for the enrolment in PhilHealth (Philippine Health Insurance Corp.),” Drilon said.

He pointed out that the additional P23-billion budget for the health sector would cover several programs, including the enrollment of five million more poor families in PhilHealth and the rehabilitation and upgrading of state-run hospitals.

“It is the poor who are the ones who go to these hospitals to seek treatment and it is they who are most affected by smoking. So we really need this and it (revenues) cannot be lower than P40 billion,” Drilon said.

Apart from the health sector, Drilon noted that the tobacco farmers would also benefit from the incremental revenues from the sin taxes in the amount of P6 billion.

Drilon pointed out that under Republic Act 7171 or the support for the farmers of Virginia tobacco in the country, 15 percent of the collections from excise taxes on tobacco products would go to the provinces where this particular plant is cultivated.

This, he said, would mean that the tobacco farmers in Northern Luzon would receive P6 billion on top of the P4 billion that they are currently receiving as their share in the excise tax collections.

Under the bill sponsored by Drilon, the low-priced cigarettes would be taxed P14 per pack while the expensive brands would be imposed P28.50 per pack.

By 2016 or three years after the implementation of the law, the rate for all brands would be uniform at P30 per pack.

More than the issue of additional revenues for the government, the sin tax bill has been packaged by the administration as a public health measure.

Health Secretary Enrique Ona expressed his preference for the original bill proposed by the Department of Finance, which was expected to generate around P60 billion in incremental revenues.

Ona argued that the higher the prices of cigarettes, the more lives would be saved so logically, he would want to see a higher rate enacted into law.

However, he said that he could live with the current version in the Senate if only to make a dent on the average 10 cigarette smoking-related deaths in the country.

Ona said that the young people should be prevented from taking up smoking and at the same time, the poor should be discouraged from continuing the habit.