Tobacco tax bill certified as urgent, approval likely

MANILA, Philippines — The Senate is expected to pass today the proposal to increase excise taxes on tobacco products, now certified as urgent by President Duterte.

As of press time, five senators were poised to continue their interpellations on the measure sponsored on Monday by Sen. Sonny Angara, chairman of the Senate ways and means committee.

Justice Secretary Menardo Guevarra, acting as government caretaker for the duration of Duterte’s Japan trip, confirmed the latter’s certifying as urgent Senate Bill 2233, which seeks to increase excise taxes on cigarettes up to P60 per pack.

Speaker Gloria Macapagal-Arroyo last week wrote Senate President Vicente Sotto III to inform him of the House of Representatives’ decision to adopt the Senate’s version of the tax measure to speed up passage of the bill.

Senate Majority Leader Juan Miguel Zubiri told reporters yesterday there is a “90 percent chance” of the bill getting passed today.

If indeed the measure breezes through the Senate, both legislative chambers could ratify the measure on Monday and transmit it to Malacañang for Duterte’s signature.

Angara and Sens. Joseph Victor Ejercito, Sherwin Gatchalian and Manny Pacquiao authored the proposals, which seek to amend pertinent sections of the National Internal Revenue Code, by earmarking the incremental tobacco excise tax for human resource development programs for health professionals as well as for undertakings aimed at combatting smuggling and other illicit trade. The tobacco industry has sustained seven tax hikes since 2012.

The committee proposed the following scheduled increase: P45 per pack increase effective Jan. 1, 2020 until Dec. 31, 2021, P50 in January 2021, P55 per pack in January 2022 and P60 per pack effective Jan. 1, 2023. This will be followed by a five percent annual tax hike starting Jan. 1, 2024.

In resorting to gradual tax increase, Angara said the committee did a delicate balancing act to eventually reconcile the competing interests of the government, health advocates, cigarette industry and tobacco farmers.

He said the authors considered the tobacco tax hike bill as an important legislation that would not only help reduce deaths and disabilities due to smoking, but also generate the much-needed funds for the Universal Health Care (UHC) program.

At the same time, he said they could not ignore the impact of raising the excise tax on tobacco farmers, whose families are dependent on the industry.

“We’re legislating not so much a single sweet spot, but a ladder where we hope all stakeholders involved can make a smooth transition,” Angara said.

The Department of Finance (DOF) said the measure would help fill in the P62-billion funding gap for the UHC.

According to the Department of Health (DOH), 85 percent of the proceeds from the excise tax would be used to finance government health programs.

The remaining 15 percent of the proceeds goes to livelihood programs and financial assistance to tobacco farmers, the DOH said.

‘Parting gift’

One of the Senate backers of the measure, Sen. Risa Hontiveros, said the passage of SB 2233 would be “one of the best parting gifts” of the current Congress to the people.

“Let us not miss this opportunity to save Filipino lives, as well as ensure our good health and wellbeing. One of the best parting gifts from the Senate this 17th Congress would be the passage of a law that will reduce incidence of smoking among Pinoys and at the same time fund accessible and effective health programs for all,” Hontiveros said.

“We need this increase in excise taxes if we ever hope to provide proper funding and resources for the Universal Health Care Act and fulfill its promise of affordable and efficient healthcare in every part of the country,” Hontiveros, vice-chair of the Senate committee on health and demography, said.

She added that the World Health Organization (WHO) has noted the effectiveness of higher taxes on tobacco in discouraging tobacco use, particularly among the youth and impoverished sectors.

Rep. LRay Villafuerte also cited the need for the Senate to pass the new sin tax reform law before Congress adjourns on June 7.

“It would be a massive opportunity lost if the legislature fails to pass this new sin tax reform law within this Congress (until June 30) as it would be back to square one for the measure when a new (18th) Congress opens in July,” Villafuerte warned.

He said sufficient funding for UHC would make every Filipino feel the benefits of economic growth.

“The Senate’s immediate passage of the sin tax bill will pave the way for the adoption of an enrolled congressional bill before the sine die adjournment next week, which will be a fitting cap to the legacy of a highly productive 17th Congress,” Villafuerte said.

But Quezon Rep. Angelita Tan, who chairs the House committee on health, said she doesn’t think the proposed tax adjustment would be enough to bridge the funding gap for the program. She said the program would require at least P270 billion a year.

The DOF said that the first year of UHC’s implementation in 2020 will require some P258 billion.

Without a new sin tax reform law, UHC will be left with a funding gap of around P62 billion in the first year alone, according to economic managers.  

This will also mean that Philippine Health Insurance Corp. (PhilHealth) members will continue to be covered for only 18 primary care drugs and seven conditions while shouldering 90 percent of the cost of prescribed medicine, according to the DOH.

The new tax measure, if enacted into law, will expand PhilHealth coverage to cover 120 drugs. With higher taxes to fund the program, there will be no more limit to primary care treatment.

Meanwhile, Social Watch Philippines (SWP) said President Duterte should intervene to facilitate the early passage of the sin tax law. The group said the fate of the measure is still uncertain despite Duterte’s certifying the bill as urgent.

“By ‘taxing tobacco to the max’, more Filipinos can be saved from smoking-related illnesses and deaths, and the UHC program will be in a better position to provide comprehensive health and integrated health programs for all Filipinos,” said Ma. Victoria Raquiza of SWP. 

She said SWP “envisions a healthier Filipino population with less smokers which will therefore result in less government expenditure required for health care.” – With Delon Porcalla, Rhodina Villanueva, Edu Punay, Cecille Suerte Felipe, Jess Diaz