Cayetano asks where sin tax money goes

MANILA, Philippines - Sen. Pia Cayetano urged the government on Monday to make public how it spends more than P91.6-billion in incremental revenues from the implementation of higher sin taxes last year. 

Cayetano said initial data coming from the Bureau of Internal Revenue (BIR) showed that for the first 11 months of 2013 alone, sin tax collections amounted to P91.6 billion. This already surpassed the BIR’s full-year collection target for 2013 at P85.8 billion.  

“Compare P91.6 billion to the BIR’s sin tax collections in 2012 at P50.4 billion, then that already represents P41 billion in incremental revenues, or an increase of 81.5 percent. And this still does not include the collections from December 2013,” the senator said. 

While the higher figures are encouraging, Cayetano wants to know how much of these billions in incremental revenues were earmarked and actually allocated for universal health care, government health programs, and the promotion of economically viable alternatives for tobacco farmers and workers.

Cayetano issued the call a year after the new sin taxes were implemented on tobacco and liquior.

Meanwhile, Sen. Ferdinand 'Bongbong' Marcos, Jr. reminded the government that tobacco farmers were identified as among the direct beneficiaries of the revenues and increments resulting from the implementation of Republic Act 10351 or the Sin Tax Reform Act.

Marcos said the tobacco farmers should not be neglected in the light of about 80 percent increase in revenues out of the increased excise tax on cigarette and alcohol products.

“It’s very clear in the law that tobacco farmers should receive a certain percentage from the revenues out of the excise tax collection from tobacco products. If the law is very clear on that, the government should make sure that the farmers will get their entitlement,” Marcos said.

Cayetano also filed Senate Resolution 440, which directs the Congressional Oversight Committee on the Sin Tax Reform Act to conduct an inquiry, in aid of legislation, into the level of compliance with the law’s revenue targets and social objectives. 

“One year after we struggled and succeeded in the passage of the Sin Tax Reform Act, have our people started to benefit from higher sin tax collections as this landmark law had envisioned?” she asked.

The law has the objective of generating funds for social services and curbing excessive smoking and drinking habits among Filipinos.

“There is an urgency for Congress to undertake this review to ensure that the twin goals of the law are being observed and complied with, namely, to enhance government’s tax collections from alcohol and tobacco products, and to allocate substantial funds from sin tax revenues for public health programs,” she added.

Hailed as a landmark health and revenue measure, the Sin Tax Reform Act was signed as Republic Act 10351 by President Benigno Aquino III on Dec. 20, 2012, and became effective a year ago on Jan. 1, 2013.

Cayetano noted that under Section 8 (B) of RA 10351, 15 percent of incremental revenues from excise taxes on tobacco products shall be exclusively used for programs to promote economically viable alternatives for tobacco farmers and workers in tobacco-producing provinces. 

The remaining incremental revenues, on the other hand, should be allocated to universal health care under the National Health Insurance Program, medical assistance, and the health enhancement facilities program as mandated by Section 8 (C) of the law. 

“Until now, there are no rules and regulations governing the earmarking of funds from incremental revenues. And as such, these funds have not been released to the concerned agencies. These are clear delays and violations of the law. The Department of Budget and Management, Bureau of Internal Revenue, and the Department of Finance owe the people and the Congress an explanation where the billions in sin tax collections are going,” she said.