Philippines: Higher sin tax to ensure expanded healthcare — DOF

29 July 2019
Chino S. Leyco

The newly signed law imposing higher taxes on cigarettes and a new tax on e-cigarettes as well as other alternative devices for smoking will enable the government to properly implement the Universal Health Care (UHC) program, in keeping with the government’s commitment to improve the lives of Filipinos by expanding the delivery of healthcare services, especially to low-income families, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said that while this new law, signed by the President last Thursday, is primarily a health measure meant to wean smokers from their addiction and discourage young Filipinos from taking up this vice, Republic Act (RA) No. 11346 will also bankroll the UHC program, which would require an initial budget of P257 billion in its first year of implementation.

“President Duterte’s goal is to implement the UHC program the way it was meant to be implemented: As a first-class law at par with the world’s best healthcare systems. It is meant to provide quality and affordable healthcare for all, especially for poor families,” Dominguez said.

“We can only accomplish this by raising the taxes on ‘sin’ products. The revenues we will collect from the higher or new taxes on regular tobacco products and their alternatives will help fill the funding gap in the UHC program.”

He said RA 11346 is in step with the President’s commitment in his 4th State of the-Nation Address (SONA) to lay the groundwork that will ensure a secure and comfortable life for every law-abiding Filipino.

The new law increases the excise tax on cigarettes from the current P35 per pack to P45 starting January next year. This will be followed by a P5 increase every year until the rate reaches P60 in 2023. Starting 2024, the rate will be increased by 5 percent every year.

RA 11346 also imposes a new tax on electronic cigarettes, including heated tobacco and vapor (vaping) products. The law imposes a minimum P10 excise tax for 0-10 ml of liquid solution or gel starting January 1. Every 10.o1-20 ml is taxed P20; 20.01-30 ml, P30; 30.01-40 ml, P40; 40.01-50 ml, P50; and for more than 50 ml, P50 plus P10 for every additional 10 ml. By 2021, the rate will be increased by 5 percent every year.

Dominguez expressed the hope that the new Congress will also pass a law within this year that will increase excise taxes on alcohol products to at least P40 per liter and further raise taxes on heated tobacco and vapor products to the same level as that of regular cigarettes.

These measures, he said, will completely fill the funding requirements for the UHC program while curbing smoking, binge drinking and other vices, especially among the youth.

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