Senate version of sin tax law to raise only P25 billion

MANILA, Philippines - The Senate committee on ways and means may adopt a sin tax measure that would raise only P25 billion, or much lower than P60 billion target of the Department of Finance (DOF).

This was among the scenarios floated by Senator Ralph Recto, chairman of the committee during the fourth and last hearing on the sin tax measure last week.

Recto said that sin tax revenues amounting to either P25 or P50 billion are among the possible scenarios that may emerge from the Senate committee. Whatever version it will be, Recto said the Department of Health should ensure that the funds would be utilized properly and really end up with the intended recipients.

Still, Finance Secretary Cesar Purisima expressed hopes that the Senate would approve the original Finance-backed version, saying this would best achieve the fiscal and health objectives of the government.

The Finance department’s sin tax proposal would raise P60 billion in incremental revenues in the first year of implementation but the House of Representatives approved in June a compromise measure that would raise P31.35 billion in incremental revenues.

Recto said that the P60-billion target is difficult to achieve.

Nonetheless, he said his committee would review the figures submitted by the Finance department and take into consideration the positions of the tobacco and alcohol industries. Recto said a committee report would be ready on Oct. 8.

This developed as JT International (Philippines) Inc. (JTIP), maker of global brands Winston, Mild Seven, Camel, and Salem, warned that a drastic hike in excise tax on cigarettes is more likely to lead to an increase in illicit trade and not necessarily decrease the smoking incidence.

Manos Koukourakis, JTIP general manager said steep increases in excise tax for cigarettes would not reach the government’s health objective to deter people from smoking.

“While tobacco consumption carries health risks, the demand for cigarettes will remain, even after a change in tax. As a consequence, consumers would no longer be able to afford legitimate brands and they will tend to buy much cheaper, non-duty or tax paid cigarettes, or worse -- counterfeit products -- which are not subject to any quality controls,” he said.