Higher taxes on tobacco, alcohol OK'd in Senate

The bill seeking to raise taxes on tobacco and alcohol products has moved closer to becoming a law with the Senate's approval late Tuesday.

Voting 15-2, senators endorsed reforms to the existing "sin tax" law in a bid to generate P40 billion worth of revenues on the first year of implementation to be used to expand healthcare services in the country.

Senators Francis "Chiz" Escudero and Joker Arroyo were the only ones among 17 legislators who voted against the most recent version of the bill certified as urgent by President Benigno "Noynoy" Aquino III.

The Palace, meanwhile, hailed the approval as "a vital step forward in improving and expanding public health safety nets for all Filipinos."

"This complements the Aquino administration’s relentless pursuit of Universal Health Care which underscores the belief that healthcare should be a right and not a privilege in our country," Presidential spokesperson Edwin Lacierda said in a statement.

Lacierda also thanked the senators who voted in favor of the measure, especially lauding the bill's sponsor Senator Franklin Drilon who he said "saw the important piece of legislation through this long, drawn out process..."

Lawmakers from the Senate and House of Representatives are now expected to reconcile their versions of the sin tax revamp through a bicameral conference committee.

Once approved by the joint body, the President will be asked to sign the bill into law.

Related story: Philippine president all out for sin tax bill but can't quit smoking

The final version of the Senate bill espoused a series of amendments, including a lower unitary tax rate per cigarette pack, introduced by Drilon, who is acting chair of the Senate Ways and Means Committee.

The approved proposal seeks to jack up tax rates on low-priced cigarettes to P12 per pack in 2013; P15 in 2014, P18 in 2015, P21 in 2016, and P26 in 2017.

A rate of P16 per pack will be imposed of medium-priced cigarettes in 2013, with taxes increasing to P18 in 2014, P22 in 2015, P24 in 2016, and P26 in 2017.

The most expensive brands will be taxed at P20 per pack in 2013, P21 in 2014, P22 in 2015, P24 in 2016, and P26 in 2017.

"We would have wanted P30, but the reality is that it is a collective body and we tried to get the vote of our colleagues and this is the sweet, if you want to call spot that we were able to find P26," Drilon said.

"Of course, a higher unitary tax is desirable, but reality is that we have to submit this to the collective wisdom," Drilon told reporters.

In other news: New tack vs RH bill: Slew of amendments

Senators also adopted Senate President Juan Ponce Enrile's suggestion to compel cigarette manufacturers to source 20 percent of their production requirements from local growers.

For alcoholic products, a two-tiered system will be adopted once the bill is enacted.

A tax of P20 plus 15 percent of the net retail price will be imposed on distilled spirits in 2013, with the rates increasing to P20 plust 20 percent in 2015.

As for fermented liquors, brands with a net retail price of P22 or less will be taxed P20 while a P25 tax will be imposed on products with a net retail price over P22.

Arroyo complained, however, that the adopted version of the reformed sin tax bill failed to specify programs to deter smoking and drinking.

"Where is the expenditure program to reduce cigarette and liquor addiction? None. What is proposed is a lump sum appropriation of P40 billion ostensibly for health care?" Arroyo asked.

"What the Senate is being asked is to authorize lump sum appropriation of P40 billion. Lump sum appropriation is a curse in budget making," he pointed out.

Also read: Higher pay seen for Pinoy 'kasambahays'


The lawmakers proposed to take 60 percent or P24 billion in revenues from taxes imposed on tobacco products against 40 percent or P16 billion target of duties imposed on alcohol products.

Once enacted, the bill is seen to raise a total of P39.5 billion in 2013, P45.7 billion in 2014, P52.3 billion in 2015, P57.7 billion in 2016; and P64.4 billion in 2017.

Allies of President Aquino claimed the additional revenues will be used to provide health coverage to 5.2 million Filipino families and for the construction and repair of hospitals in the country, among others. (with reports from Kim Arveen Patria)

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