Gordon wants programs for tobacco farmers amid proposed 'sin tax' hike

Ina Reformina, ABS-CBN News

Posted at May 28 2019 11:14 PM | Updated as of May 28 2019 11:34 PM

MANILA - Sen. Richard Gordon on Tuesday demanded clear-cut government programs to cushion the “sin tax" hike’s impact on tobacco farmers. 

Interpellating sponsor Senate Ways and Means Committee chair Senator Sonny Angara during Tuesday’s plenary session, Gordon expressed concern for tobacco farmers who will be affected and possibly face displacement should the proposed P60 tobacco tax bill be passed into law.

Senate Bill No. No. 2233 proposes a P60 sin tax hike per pack over a 4-year period, proposing a starting rate of P45 in 2020 or an increase of P10 in the first year of implementation, followed by a series of annual P5 increases until the rate reaches P60 in 2023. 

“You have to prove to us here plain and simply what happens to them…. Our people out there are suffering not from the smoking but the unhinging of their daily lives," Gordon said.

“Is there a study by government to take care of them or is government taking the cavalier stance and let them take care of themselves?"

Sen. Sonny Angara, sponsor of Senate Bill No. 2233, assured that government is "very much concerned about the well-being of these farmers."

"The Senate can also take credit for improving lives because we passed the free college tuition so that the children of these farmers don’t have to worry about where to go to school. We passed the Universal Health Care; if we find the money for that then that takes the burden out of these families,” he said. 

In his sponsorship speech Monday, Angara explained that 15 percent of the incremental revenue collected from the excise tax on tobacco products will be divided among tobacco-producing provinces for programs that support the farmers. 

Sen. Sherwin Gatchalian, meanwhile, said excise taxes on tobacco products must be increased by P70 per pack if government were to meet its objective of significantly reducing the country’s smoking prevalence and plugging the budget gap for the recently passed Universal Health Care Act (UHC).

Gatchalian said that while he supports the P60 tobacco tax bill, studies made by his office show the P70 rate will yield P360-billion in incremental revenues and decrease the number of smokers by 1 million.

The current proposed measure targets P62-billion in the first year, and a reduction in smoking prevalence by 970,000.

“P70 per pack is the optimal value. I’d like to propose an amendment to raise ‘sin’ tax after 5 years from P60 to P70 per pack. I’d like to ask the good sponsor to take a look at this study and we think this is the optimum both in terms of revenues and in terms of benefits,” Gatchalian said. 

“We’ll take a look at that given that he’s (Gatchalian) made a strong case for that figure,” Angara replied.

Sen. Ralph Recto raised the possibility of raising excise taxes on sugar to help fund the government’s Universal Health Care program. 

Recto pointed this out during his interpellation of Senate Ways and Means Committee chairman Sonny Angara, sponsor of Senate Bill No. 2233, which proposes a P60 tobacco ‘sin’ tax over a 4-year period. 

“Assuming that there’s a funding gap in what we need to accomplish with UHC… would the government agree that we earmark also the excise tax on sugar to be part of the funding requirement for UHC?" he said.

“So we can put in this bill the collection of P42-billion excise tax on sugar and they’re saying that the reason why they’re collecting this sugar is not good for health; why not include tht now in the pie for resources for UHC? Now we have 3 sources: tobacco, alcohol, and sugar.” 

Recto explained that “you don’t want to increase taxes too much that will create illicit trade, smuggling, corruption, and loss of livelihood,” referring to the proposed P60 tobacco ‘sin’ tax hike. 

Recto also questioned why apart from a proposal to increase the tobacco sin tax hike, government is not keen on plugging the UHC funding gap with stiffer anti-corruption efforts and correcting inefficiencies and health insurance fraud. 

“They’re asking us to pass a measure that P62 billion, why not hating kapatid? Why not let them reduce corruption and deficiencies and health insurance fraud by P30 billion and we raise [the remaining] P30 billion?”

Some P257-billion is needed to fund the first year of implementation of UHC.

President Rodrigo Duterte on Tuesday certified as urgent the tobacco tax bill. 

The Department of Health is targeting smoking prevalence to dip to 15-percent by 2022, from 22-percent in 2015.