MANILA, Philippines - Malacañang on Wednesday thumbed down a call of supermarket owners for the government to not raise too high the excise tax on tobacco and alcohol products since public health—the primary beneficiary of the sin-tax reform bill—is “non-negotiable.”
The Senate version of the sin-tax bill, expected to bring in over P30 billion in additional revenue from higher liquor and cigarette taxes, will likely be passed by October before senators get tied up in marathon deliberations on the proposed P2.007-trillion budget for 2013, Sen. Ralph Recto said also on Wednesday.
Palace Spokesman Edwin Lacierda was responding to the appeal of the Philippine Association of Supermarkets Inc. (Pasi), which had sought a “reasonable” increase in the excise tax of so-called sin products as the current rate proposed in Congress would reduce their sales volume.
“Public health is non-negotiable. That’s part of the reason we’re looking at it from both ends–public health and revenue generation. It has never been an issue. That’s why we’re reforming the sin tax. The proceeds will go to our public health,” he said.
According to Lacierda, the government expects to generate “enough revenues,” estimated at P33 billion, from the measure to augment funds for its universal health coverage program.
On Pasi’s concerns about reduced sales, he said that based on a Finance department study of other countries that have imposed higher excise taxes on sin products, “there is a slight drop [in consumption] but eventually, it goes up again. The level of consumption eventually goes back to normal.”
Lacierda said that in Singapore, for example, cigarette packs are required by law to bear photos on the effects of smoking, like mouth cancer.
“Those photos are very gory, yet in spite of that, there has been a consistent consumption of cigarettes there,” he added.
In saying the sin-tax reform bill would be passed in October, Recto said they are ready to start public hearings on the measure on Thursday next week to enable the Senate to get inputs from Finance Secretary Cesar Purisima, as well as affected industry stakeholders. He is the chairman the Senate Ways and Means Committee that will review the Malacanang-endorsed sin-tax bill.
“It is our duty to pass the tax measure,” Recto said even as he gave assurance his committee would strive to come up with legislation that will spread the tax burden equitably on the affected sectors.
He added that he planned to submit a committee report on the Senate version of the sin-tax bill by September, so that a plenary vote to approve the measure could be called by October for the legislation to be submitted for signing into law by President Aquino before year-end.