‘World-class’ healthcare system seen with ‘sin’ tax

Published January 15, 2020, 12:00 AM

by manilabulletin_admin

By CHINO S. LEYCO

The Department of Finance (DOF) said yesterday that the Congress-approved “sin” tax law on alcohol and alternative cigarettes would usher in the country’s world-class healthcare system for all Filipinos.

Finance Secretary Carlos G. Dominguez III said the passage of the still unsigned sin tax law will not only deter smoking and binge drinking, but will also augment funding for the cash-intensive universal health care (UHC) program that will primarily benefit low-income families.

According to Dominguez, the Duterte administration wants to implement the UHC program as a “first-class law at par with the world’s best healthcare systems,” which is now requiring ₱1.44 trillion in the next five years.

Based on government estimates, UHC requires at least ₱257 billion this year alone and the annual funding need will grow by an average of around ₱11 billion to ₱12 billion between 2020 and 2024.

To recall, a bill imposing higher excise taxes on alcohol products, and an increase in the tax rates for e-cigarettes, such as heated tobacco products and vapor products was approved by the Congress and is now up for President Duterte’s signature.

This new ‘sin’ tax measure comprises Package 2-plus of the comprehensive tax reform program (CTRP), which seeks to make Philippine taxation fair and transparent even as it provides a steady revenue stream for the government.

“All the hard work we put in to reform our policies and build an inclusive economy have resulted in a palpable improvement in the lives of our people,” Dominguez said in a statement.

Tobacco excise taxes were first raised under the Duterte administration through the Tax Reform for Acceleration and Inclusion Act (TRAIN), which has so far raised ₱91.3 billion in revenues in the first nine months of 2019.

“All the hard work we put in to reform our policies and build an inclusive economy have resulted in a palpable improvement in the lives of our people,” Dominguez said.

Aside from TRAIN, President Duterte also signed into law Republic Act (RA) 11346, which raised the excise tax on tobacco products to ₱45 per pack beginning in 2020, followed by a series of ₱5-per-pack increases until the rate reaches ₱60 in 2023.

RA 11346 also includes a provision taxing e-cigarettes by at least ₱10 per millimeter for e-juices with high nicotine concentrations, also known as nicotine salt.

But under the bill up for the President’s signature, this minimal rate has since increased to be closer to that of cigarettes based on comparative consumption patterns.

“We are the only administration that actually cleaned up the cigarette industry and raised tobacco excise taxes twice. This has never happened in any past administration,” Dominguez said.

While raising funds for human capital development through higher “sin” taxes took center stage in 2019, significant progress was also made in the rest of the CTRP packages.

 
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