The recently passed amendment to the Sin Tax Reform Law to revert to the equitable two-tier excise system is constitutionally mandated, according to a veteran lawmaker.
Quezon City 1st District Representative Vincent “Bingbong” Crisologo said House Bill No. 4144 was in accordance with the 1987 Constitution, specifically Article VI, Section 28 that requires Congress to evolve a progressive system of taxation.
“Any product must be taxed according to classification. If the product is classified premium, it must be meted with a higher tax and if a product is non-premium it must be taxed lower. That’s based on fundamental law,” Crisologo said during Congress deliberations.
HB 4144, authored by Rep. Eugene de Vera of ABS Partylist, proposes a two-tier tax system where cigarette packs priced P11.50 below will be levied P32.00 and those priced P11.50 above will be levied P36.00 plus a five percent annual price increase thereafter.
The current law only imposes a unitary tax of P30.00 regardless of cigarette pack net retail price and a four percent annual increase.
Crisologo attributed the bill’s swift passage to a move to balance multiple issues, particularly in health, government revenues and the plight of lowly tobacco farmers.
“First, if prices are higher, it will discourage smokers to buy harmful products; second, it will help fill up lost government revenues as the administration plans to lower income taxes; and third, farmers will be able to continue their main source of livelihood,” he said.
A Senate sin tax presentation from Sen. Ralph Recto on Oct. 10, 2012 stated that although the main objective of sin tax law was to ‘crush’ cigarette smoking, it was an impossible feat to accomplish in the real world.
It also said that banning cigarettes altogether would weaken the government’s revenue and result in a fiscal shock, and added that a two-tier system sought to “get more bucks out of fewer packs.”