Philippine Senator files separate bill seeking sin tax reforms

MANILA, Philippines – Senator Miriam Defensor-Santiago has filed a bill seeking reforms in the collection of excise tax on tobacco and alcohol products, allocating revenues for the universal health care system and initiating a livelihood program for tobacco farmers.

Santiago said that Senate Bill No. 3249 aimed to amend National Internal Revenue Code of 1997 as amended by Republic Act No. 9334, in order to institute urgent needs for reform on excise tax on such products to achieve these goals:

(a) Deter young people from smoking and drinking alcohol, and protect them from the lifetime consequences of smoking and alcohol abuse;

(b) Reduce the consumption of cigarettes and alcohol, thus decreasing the health and

health care costs of tobacco and alcohol use; and

(c) Finance a universal health care program to improve accessibility to quality health care.

Santiago also said this version of the sin tax bill contains the following reforms in the system:

(a) Removal of the price classification freeze on cigarettes. The current classification of cigarettes is still based on a net retail price survey done in 1996. It’s been 16 years and prices of cigarettes have definitely increased through the years.

(b) Unitary tax for all cigarette and alcohol products. The effect of cigarettes and alcohol is the same regardless of the price.

(c) Indexation to the nominal gross domestic product (GDP) growth rate as published by the National Statistical Coordination Board (NSCB). Indexation to GDP will keep tax rates real and will ensure that tobacco and alcohol products will not become more affordable as income increases over time.

(d) Significant increase in tax rates. This will serve as a deterrent to the young and the poor from tobacco use and alcohol drinking.

The bill is also geared at the earmarking of incremental revenues to a universal health care system—specifically to be allocated to the expansion program and benefit delivery of National Health Infrastructure Program (NHIP), upgrading of health care facilities, research and development to address non-communicable diseases.

“This provides the poor some protection from the financial impact of health care by improvement in the delivery ratio of the NHIP and improves access to quality health care services and achieve public health programs to include research and development under the millennium development goals,” Santiago explained.

The bill also mandated the tax agency to make a periodic review (every 5 years) to modify tax rates to achieve the health and revenue objectives of the government as well as to comply with binding commitments to the World Health Organization (WHO) Framework Convention on Tobacco Control.

Santiago also said that 15 percent from the excise tax on tobacco products will be earmarked for a program to help tobacco farmers (including financing of credit guarantee and crop insurance program) shift to alternative crops other than tobacco and other alternative livelihood; and adjustment  measures for the prevention of job losses and assistance to displaced workers.

She said the  bill is supported by the Philippine College of Physicians, the Philippine College of Chest Physicians, the Philippine Cancer Society, Inc., the Framework Convention on Tobacco Control Alliance, Philippines, and the Philippine Society of Gastroenterology.

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