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Tax hike targets ‘sin’ items

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President Rodrigo Duterte on Tuesday certified as urgent a measure to increase taxes on alcohol, heated tobacco, and vapor products to generate additional funds for the Universal Health Care Act.

READ: Sin tax hike will make Filipinos healthier—DOH

In a letter addressed to Senate President Vicente Sotto III and House Speaker Alan Peter Cayetano, President Duterte asked lawmakers to immediately pass a law increasing excise taxes on “sin products” to further “protect the right to health of the people.”

The proposal seeks to raise some P47.9 billion to cover a P59.1=billion funding gap for universal health care, data from the Department of Finance showed.

Senator Pia Cayetano, chairperson of ways and means committee, sponsored Senate Bill 1074 on Sept. 25 which seeks to align the tax rate of heated tobacco products and vape with that of traditional cigarettes at P45 starting next year.

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For alcoholic beverages, Cayetano proposed to increase the tax on distilled spirits from P23.5 to P90 per proof liter with a 20 percent ad valorem tax beginning next year.

Fermented liquors and alcopops would be taxed at P45 per liter, up from P25.4. A specific tax of P600 would be imposed on sparkling wines, while a specific tax of P43 would be imposed on still and carbonated wines beginning 2020.

For e-cigarettes under the heat-not-burn product category, the bill seeks to increase the current rates of P10 per pack of 20 to P45 per pack on Year 1 to be at parity with regular cigarettes.

For vapor products, there will be a distinction between salt nicotine and freebase. From P10 per 10mL or less, salt nicotine will increase to P45 per mL, while freebase will increase to P45 per 10 mL on Year

1. These rates will increase by P5 every year until Year 4 then 5 percent every year thereafter.

In the House, its counterpart proposal was House Bill 1026, which also seeks to impose taxes on distilled spirits, fermented liquors, and wines.

Under the proposal, the tax would increase 7 percent annually starting in 2020 for wines, and in 2023 for distilled spirits and fermented liquors.

More than half of Filipinos aged 20 to 59 engage in the harmful use of alcohol in the form of binge drinking, according to Food Nutrition and Research Institute’s Clinical and Health Survey in 2015.

The same survey also showed among Filipino youth aged 10 to 19, 14.9 percent consume alcohol, and 36.7 percent of these are underage drinkers.

In July, Duterte signed a law raising excise taxes on cigarettes by P45 per pack by 2020, P50 per pack by 2021, P55 per pack by 2022, and P60 per pack by 2023.

Republic Act No. 11346 was expected to bring P15 billion revenue to boost funding for the Universal Health Care Law and programs of the Department of Health.

Revenues would be allocated and divided among the tobacco-producing provinces.

The increase in tobacco excise tax is part of the administration’s second tranche of tax reform legislation.

Cayetano on Tuesday said “a vote for sin tax is a vote for our people’s health and well-being.”

She welcomed the President’s move to certify her bill as urgent.

“I am pushing for a version that recommends higher tax rates than those approved by the House of Representatives for two reasons: First, it will provide proper funding for the delivery of health services to all Filipinos; and second, it will effectively reduce the consumption of sin products,” Cayetano said.

“There is a need to increase sin taxes substantially for it to have any health impact. Otherwise, we will fall short at meeting our health objectives,” she added.

“We cannot save lives by increasing the price of a sin product by a negligible amount. We can only make this an effective measure when the price increase is substantial enough that people would think twice on the volume of the products they will purchase and consume,” Cayetano said.

Once a bill is certified as urgent, Congress can skip the three-day rule, allowing lawmakers to pass a measure on third reading immediately after it is passed on second reading.

READ: ‘Sin tax hike ensures fund for healthcare’

READ: Congress ends on sin tax OK

READ: Senate votes for ‘sin’ tax hike; House okays in offing

READ: ‘Sin’ tax bill up for crucial vote

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