The Sin Tax Bill has moved a step forward toward becoming a law, according to Senate ways and means committee chairman Pia Cayetano.
The members of the joint panel of the Senate and House of Representatives approved Wednesday afternoon the bicameral conference committee report reconciling the disagreeing provisions of the sin tax bill, which seeks to raise excise taxes on alcohol and e-cigarette products in the country beginning Jan. 1, 2020.
Cayetano, along with House Ways and Means Committee Chairman and Albay Rep. Jose Salceda, led the bicameral discussions that lasted for more than four hours.
Based on estimates of the Finance department, the approved bicam version will generate P22.2 billion in incremental revenues from alcohol and e-cigarettes during the first year of implementation. But due to an amended provision exempting specific prescription medicines from the value-added tax, the revenues from the measure will decrease by P5.2 billion for a total of P17.1 billion worth of net incremental revenues for 2020.
The earmarking of revenues from higher sin taxes would be undertaken as follows: 60 percent will go to the Universal Health Care program, 20 percent to the Health Facilities Enhancement Program of the Department of Health, and the remaining 20 percent to the programs seeking to attain the country’s Sustainable Development Goals.
The tax rates approved by the bicam panel are the following:
• Fermented Liquor (specific tax rate): P35 in 2020, P37 in 2021, P39 in 2022, P41 in 2023, and P43 in 2024, with a 6 percent indexation thereafter.
• Distilled Spirits (specific tax rate with 22 percent ad valorem tax): P42 in 2020, P47 in 2021, P52 in 2022, P59 in 2023, and P66 in 2024, with a 6 percent indexation thereafter.
• Sparkling and still wines (specific tax rate): P50 in 2020, with a 6 percent indexation thereafter.
• Heated Tobacco Products or HTPs (specific tax rate): P25 in 2020, P27.50 in 2021, P30 in 2022, and P32.50 in 2023, with a 5 percent indexation thereafter.
• Salt Nicotine (specific tax rate): P37 in 2020, P42 in 2021, P47 in 2022, P52 in 2023, with a 5 percent indexation thereafter
• Free Base (specific tax rate): P45 in 2020, P50 in 2021, P55 in 2022, P60 in 2023, with a 5 percent indexation thereafter
Cayetano said she would have preferred the higher tax rates originally proposed under Senate Bill 1074. Nevertheless, the ways and means committee head said she respected the democratic deliberations that happened during the bicam, which paved the way for the bill’s approval.
“As a health advocate… I have two roles: increasing the tax for purposes of UHC [and using taxation] as a deterrent to the consumption of a product that is not healthy I had hoped [for higher tax rates], but that is how democracy works, that is how we work as a bicameral house, so the figures we have are what they are and they will still go a long way, the senator said.
“At the end of the day, I pushed [for this measure] until the very end. Pagkatapos nun, move on na. [We will] try to do a better job next time, [and] try to find additional sources.
“I am the kind of person who really sets my standards high. I really wanted to find enough funding to continually support UHC and to use the price imposed on sin products, whether it’s alcohol, ecig, or HTP, as a deterrent.
“My next goal will be to really have advocacies and health campaigns to help people switch to healthier alternatives, because we don’t want young people, or even not so young [ones], to become addicted to a new bad habit.”