By Chino S. Leyco
The Department of Finance (DOF) respects the Congress’ decision to approve much lower taxes on sin products despite its financial burden for the implementation of the government’s universal health program (UHC).
Finance Secretary Carlos G. Dominguez III said the watered down version of bill seeking to impose higher excise tax on alcohol, heated tobacco products (HTC) and vapes was better done noting.
“As I said, when you go into the legislative process, you don’t get everything you want but it’s certainly better than the alternative of doing nothing,” Dominguez told reporters.
Last Wednesday, the Senate and the House of Representatives ratified and endorsed their reconciled version of new sin tax bill, whose revenues will fill the funding gap of UHC.
Based on initial estimates, the approved bicameral version will generate only ₱22.2 billion in incremental revenues in the first year of implementation, below the Department of Finance’s target of ₱47.9 billion.
“Maybe it’s not exactly what we want but the wisdom of the legislature is to be respected and we appreciate the understanding and the actions the legislature has taken,” Dominguez said.
“These actions are certainly a lot better than past legislatures so I want to thank them, both houses for their wisdom and their support for the program to improve the standard of living of the Filipinos in the long term,” he added.
According to the finance chief, the series of sin-tax related measures passed by the Duterte administration have also performed 70 percent better in terms of revenues compared with the previous administration.
“When we look at the entire project, and we look at those three achievements of the Duterte administration, we have increased our collection of these sin taxes by almost 70 percent from what was achieved by the Aquino administration,” he said.
“I only have the figures for the alcohol and cigarettes, I haven’t put in here the figures for the sweetened beverages but just the alcohol and cigarettes are already 70 percent more than what was achieved under the Aquino administration,” Dominguez added.
Of that 70 percent, he noted that roughly 50 percent came from increased taxes on alcohol, tobacco and e-cigarettes, while the remaining 20 percent was due to better compliance by the manufacturers and stricter enforcement.
Meanwhile, the Action for Economic Reforms (AER) said that the gains from the final version are acceptable even as it expresses its disappointment over some lawmakers perceived efforts to undercut maximum gains.
As agreed upon during the bicameral conference committee meeting, the excise tax on distilled spirits will be increased from ₱23.5 to ₱42 per proof liter with a 22 percent ad valorem tax beginning next year.