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SOURCE: Press and Public Affairs Bureau

House panel approves increase on tobacco excise tax to P45 by 2022
27 November 2018 07:13:09 PM

The House Committee on Ways and Means chaired by Rep. Estrellita Suansing approved on Tuesday proposals to increase the unitary excise tax rates on tobacco products.

The panel voted to raise the current tax of P30 per pack of cigarettes to P37.50 beginning July 2019. It will increase further to P40 in July 2020, P42.50 in July 2021, and P45 in July 2022. Thereafter, the rate shall be raised four percent every July annually.

The decision was based on lengthy deliberations on House Bill 4575 by Rep. Joey Sarte Salceda (2nd District, Albay) and HB 6648 by Rep. Angelina Tan (4th District, Quezon).

The measures proposed raising excise rates on tobacco products, building on the success of Republic Act 10351 or the Sin Tax Reform Law enacted in 2012.

The bills also sought to address smoking prevalence and its negative consequences on both the health of the population and the consequent cost on the country's economy.

Salceda and Tan reasoned that increasing the excise tax would prohibit the youth and other vulnerable sectors, such as the poor, from smoking. Because the government subsidizes the healthcare costs of these sectors, the economy is spared billions in expenses if it successfully deters and curbs smoking prevalence.

In addition, the funds collected from the increase in excise tax could be used to help tobacco farmers and fund the Universal Health Care (UHC).

To this end, the committee decided to retain the current share of incremental revenue. Fifteen percent of what will be collected shall be allocated for tobacco farmers and 85 percent shall be used to fund the UHC.

During the meeting, resource speakers voiced their positions on the approved tax rates.

Government agencies in particular sought for reconsideration of the approved rates.

The rates come below P60 per pack, which the Department of Health (DOF) and Department of Finance (DOF) projected will push the prices of cigarettes to the point where it can effectively curb smoking prevalence and supplement the funds for the Universal Health Care (UHC).

National Academy of Science and Technology (NAST) representative Antonio Dans noted that preliminary calculations project about 150,000 new smokers as a result of the approved increase.

"I just wanted to point out that the current proposal enables 150,000 new smokers a year. Most of them will be from the young. So I had wished that we would keep that, that we would have considered that in making a proposed tax increase," Dans said.

Health Undersecretary Eric Domingo asked that the rates be further considered, if only to prevent new smokers.

"We really appreciate all the work of the committee and thank the committee. But we just are still holding out some hope that maybe some reconsideration can be made just so at least we would get the level that there's no new enrollees and no new smokers. And that would be at about P45," he explained.

Likewise, DOF Undersecretary Karl Kendrick Chua recalled the proposal of HB 4575, which sought to gradually raise taxes from P30 to P60 over a period of five years, and suggested that the committee revisit the price indexation of tobacco and alcohol.

"Just two points. One is we understand of course the concerns of the (House) Members. But the bigger concern of course is providing a better healthcare system and addressing the prevalence of smoking. That's why we have to register our suggestion for you to consider, maybe in the Plenary, the proposal of Congressman Salceda that sets a path towards the P60," Chua said.

"The other point, if you will go through your proposal, the alcohol indexation is seven percent. The tobacco is four. Maybe aligning to the seven percent would be something that you can consider," he added.

Other resource speakers urged the committee to consider other factors, such as provisions to address illicit trade and to allocate for health programs.

Philippine Tobacco Institute representative Chita Herce emphasized the need for policy action on illicit tobacco trade.

"I hope that in the substitute bill, there would be measures to curb illicit trade, as I mentioned, so that the issue on youth smoking can be properly addressed," she said.

Ralph Degollacion of the Health Justice Philippines said that health promotion programs against smoking should be specifically allocated for under the UHC.

"We would like to note as well that while we are passing tax rates at the moment, we hope that the committee can also consider in the floor allocating specifically for the health promotion programs… Under the Universal Health Care, the health promotion programs should be given emphasis," Degollacion stated.

Members of the panel acknowledged the resources speakers' concerns, but asserted that the government agencies have to fulfill their roles in preventing the rise of smoking prevalence and in combating illicit trade.

"This is a collaborative effort. We do our job here, you [should] do your job as well. Kasi kahit anong gawin namin dito, making laws imposing excise taxes, kung 'yung enforcement naman and the enforcement of DOH is not working. Kaya mahirap i-convince itong lawmakers because of lapses on the side of the executive," Suansing said.

Rep. Manuel Zubiri (3rd District, Bukidnon) lamented the underspending of government agencies. He noted that the funds generated by these kinds of legislation should be fully utilized by agencies.

“Yung COA (Commission on Audit) na po lumalabas ng mga warning sa ating mga ahensya na, ‘Increase your spending kasi bilyon bilyon ang ating underspending.’ So ngayon we want to know, we're taxing the populace but we have underspent amounts in the Treasury, if I'm not mistaken,” said Zubiri.

"I'm just trying to be logical and practical with what goes on with us. I think that it's also unfair for us to keep taxing the populace—not just with one industry, with the other industries—if we are not spending the money we are supposed to spend on the populace," he added.

Deputy Speaker Raneo Abu echoed the sentiment, saying that the Filipino public should see the commensurate benefits brought on by the increase in taxes.

"Naiintindihan namin ang pangangailangan ninyo. Naiinitindihan namin. Pero sana maintindihan din ninyo kami na nagtatanong sa amin 'yung mga tao, 'yung constituents namin. Show us first kung anong gagawin ninyo sa pondo. Kung ano 'yung magagandang sinasabi ninyo sa amin, ipakita ninyo sa amin," Abu said.

"Tulad n'yan, iyung pagtataas ng rate natin in six months' time, nagtaas pa uli tayo nang panibago. Magpakita lang tayo ng kung anong sinasabi ninyong magaganda. Then bumalik uli tayo dito, pag-usapan natin," Abu said. | Czarina Engracia