Palace: Sin tax will discourage people from smoking, drinking

MANILA, Philippines - Malacañang is confident the sin tax measure being readied for bicameral conference committee discussion will effectively discourage people from smoking and drinking as well as address the government’s revenue requirements.

Secretary Manuel Mamba of the Presidential Legislative Liaison Office said that after 15 years of being subverted by lobby groups, a sin tax measure is finally within reach because of an incorruptible president.

“It’s fortunate that the President saw this through and who could not be bought,” Mamba said.

Mamba, a former member of the House of Representatives, said over radio dzRB on Thursday that the lobby against the bill had been so intense that President Aquino had to use his moral suasion and authority to help ensure passage of the measure.

Mamba said the Palace would see to it that all the provisions finalized in the bicameral conference committee would be beneficial to the people, especially to the young and to tobacco farmers.

He said the government would have to take care of its people and ensure their health and wellbeing by making cigarettes and alcohol unaffordable.

“Maybe it’s important for the people to know that this is not about taxes per se but for health reasons. So our people will not be destroyed, I hope the people will see this and avoid (vices),” Mamba said.

“This is the first time that this happened after 15 years because this (issue) has been protected by people who are earning from it,” Mamba said.

Mamba said they were hoping that the sin tax bill would be finished in December and implemented by January. 

Even Sen. Ferdinand Marcos Jr. said the local tobacco industry is safe under the Senate version of the measure.

Marcos said he was satisfied with the approval of his counter proposal to make the increase of taxes in tobacco gradual and not immediate as proposed by the Department of Finance.

“The desire (of the tobacco industry) to increase the taxes slowly and not immediately has been granted in the Senate version and we are satisfied. I hope it would not be reversed by congressmen during our bicameral meeting,” Marcos said in an interview with The STAR in San Juan, La Union.

Marcos, who voted in favor of the sin tax reform bill, said the tobacco industry might not be able to withstand an abrupt rise in taxes. “Do not kill the goose that lays the golden egg,” he said.

Tobacco farmers also appealed yesterday for moderate and gradual rise in cigarette taxes.

The PhilTobacco Growers Association (PTGA) led by Saturnino Distor acknowledged that the version approved by the Senate was a “significant improvement” over proposals originally presented by finance officials. But the group said the approved version may still be detrimental to small cigarette producers who cater to low-income consumers.

“Small manufacturers produce low- to mid-priced brands, which account for about 65 percent of the local cigarette market. Farmers, on the other hand, depend largely on the production of these low- and mid-priced brands to be able to sell their produce at competitive prices,” Distor said in a statement.

“Aren’t our senators elected by the Filipino people? Then why are they more concerned with foreign companies? Why should there be only one rate for local and imported, when prices and target consumers are different?”

Earlier this week, Senate Bill 3299, which is seen to generate P39.5 billion in revenues from higher taxes on alcohol and tobacco, was approved on third and final reading.

Under SB 3299, hand-packed cigarettes shall be subject to an excise tax of P12 per pack effective Jan. 1, 2013.

The excise tax rate shall rise to P15 per pack in 2014, P18 in 2015, P21 in 2016 and P26 per pack in 2017.

The same tax rates shall apply to machine-packed cigarettes with current excise taxes amounting to less than P7.56.

For machine-packed cigarettes currently subject to excise tax rates of between P7.56 and P12, the new tax rate shall be P16 in 2013, P18 in 2014, P22 in 2015, P24 in 2016 and P26 in 2017.

As for machine-packed cigarettes with a current excise tax rate of more than P12, the new tax rate starting next year shall be P20 per pack, increasing to P21 in 2014, P22 in 2015, P24 in 2016 and P26 in 2017.

By 2018, the rates will be increased by four percent annually. – With Jun Elias, Christina Mendez