Reform to hike excise taxes must be up

An increase to the funding gap for the Universal Health Care Law means that the reform to increase excise taxes on alcoholic beverages, heated tobacco products, and vapor products must now be a priority measure, according to health advocates.

Senator Manny Pacquiao noted the excise tax rates on alcoholic beverages, HTPs, and vape proposed by Ways and Means committee chairperson Pia Cayetano were higher than those filed by Pacquiao in his version of the measure.

According to Cayetano, a significantly higher rate is necessary because the currently proposed 2020 budget for health is lower than expected, leading to a further increase to the funding shortfall for the UHC’s implementation.

“The amount anticipated to be received through the GAA was P195 billion, but in fact, it is currently only P182 billion. Because of that, the gap increases,” Cayetano explained.

Because of this, Sin Tax Coalition co-convener Dr. Anthony Leachon said that there must now be a greater urgency in approving the tax increase on alcohol and e-cigarettes.

“We urge our senators to quickly approve the reform to raise taxes on alcohol and e-cigarettes. The UHC is a landmark health reform signed earlier this year, and securing the full funding for this is imperative; otherwise, we risk facing significant delays in achieving our milestones for health care,” Leachon said in a statement.

Leachon also reiterated the coalition’s call to President Rodrigo Duterte to certify Senate Bill 1074 as an urgent measure.

Finance Secretary Carlos Dominguez III said Senate Bill 1074 is expected to raise at least P47.9 billion in incremental revenue for its first year of implementation, which would help bridge the funding gap for the first year of UHC.

Cayetano explained that in proposing higher rates, she is fighting for the welfare of vulnerable sectors such as the poor, in order to discourage their consumption of these products, and generate revenues to help make access to health care easier for them.

“We also mention that the number of deaths related to alcohol and e-cigarette use has been rising globally, and taxation is one of the most effective tools to protect the health of the Filipino people,” Leachon added.

Senate Bill 1074 sponsored by Cayetano proposes to align the tax rate of HTPs and vape with traditional cigarettes at P 45 beginning next year, PhP 50 in 2021, P 55 in 2022, and P 60 in 2023, with 5 percent annual increases from 2024 onwards.

EVALI, or e-cigarette or vaping product use-associated lung injury, has over 1,900 reported cases in the US, with a majority coming from the youth. So far, 37 people in the US have lost their lives due to EVALI, and cases are starting to emerge in other countries as well.   

Meanwhile, for alcoholic beverages, Cayetano proposes to increase the tax on distilled spirits from PhP 23.5 to P 90 per proof liter with a 20 percent ad valorem tax beginning next year. 

Meanwhile, fermented liquors and alcopops would be taxed at P 45 per liter, up from P 25.4.   

 Finally, a specific tax of P 600 would be imposed on sparkling wines, while a specific tax of PhP 43 would be imposed on still and carbonated wines beginning 2020.

Interpellations on Cayetano’s proposal are expected to continue in the coming plenary sessions in the Senate. In a press conference held Tuesday, Cayetano mentioned that she hoped that the measure would be approved before Christmas. 

Topics: Universal Health Care Law , Manny Pacquiao , Pia Cayetano , Manny Pacquiao
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