The 17th Congress adjourned sine die Tuesday on a high note as it approved a bill raising the tobacco excise tax and acceded to a clamor among House members for a 70-30 sharing of the proceeds in favor of tobacco-producing cities and municipalities.
The Senate, which initially passed the measure on third and final reading Monday night, reconsidered its approval Tuesday and withdrew the amendment introduced by the Department of Finance for a 50-50 revenue sharing of the cities and municipalities on one hand and the provinces on the other.
The Department of Finance said the measure will help fill in the P40-billion funding gap for the implementation of the Universal Health Care law.
“With the approval by both the Senate and the House of Representatives of the bill seeking higher tobacco excise taxes, we have come one step closer to giving the government more elbow room to plug the funding gap for the UHC program that aims to provide all Filipinos with affordable and quality health care,” said Senator Juan Edgardo Angara, chairman of the ways and means committee.
“We look forward to seeing President Duterte sign this important bill into law,” Angara said, noting that the Chief Executive himself wanted the bill passed into law before the adjournment of the current Congress when he certified it as urgent last week.
The original sin tax law of 2012 put the revenue sharing at 90-10, with the bulk of collections going to cities and municipalities, and 10 percent going to provincial governments to allocate for livelihood projects and to support tobacco farmers.
Speaker Gloria Macapagal Arroyo said lawmakers from tobacco-producing provinces in Northern Luzon were against the 50-50 distribution of tobacco tax shared between municipalities and provinces.
The lawmakers went back to Finance Secretary Carlos Dominguez and Undersecretary Karl Chua to make the needed adjustments, saying the law might be held hostage if the amendments are not carried out.
During the plenary session, it was decided that some P17 billion will be given to farmers producing Virginia-type cigarettes and P4 billion would go to farmers producing barley. The amount would come from 15 percent of the sin tax collected from tobacco and alcohol products.
The measure imposes an increase of P45 to P60 per pack in excise tax beginning next year to 2023 and then a 5 percent yearly hike effective Jan. 1, 2024.
The scheduled increase would be as follows: P45 per pack increase effective Jan. 1, 2020 until Dec. 31, 2021, P50 in January 2021, P55 per pack in January 2022 and P60 per pack effective Jan. 1, 2023.
Also, an excise tax of P10 per pack of 20 units will be imposed on heated tobacco products, while vapor products will have a P10 excise tax for every 10 milliliters starting Jan. 1, 2020. These rates will increase by 5 percent annually beginning January 2021.
On Tuesday night, the House adopted the Senate version of the bill.
The House, presided by Deputy Speaker Mylene Garcia-Albano, in plenary session adopted the Senate version of the measure after senators accepted the proposal of congressmen from tobacco-producing provinces for a distribution of tobacco tax share between municipalities and provinces.
The adoption came as 17th Congress adjourned sine die, with 214 lawmakers in attendance.
The World Health Organization said that raising taxes on cigarettes would save 460,000 lives.
READ: Senate votes for ‘sin’ tax hike; House okays in offing