Senate reviews impact of Sin Tax Reform Law

MANILA, Philippines – The Senate has started reviewing the impact of the Sin Tax Reform Law on revenue collection and public health, deferring action on a bill that seeks to return to the two-tier system in taxing cigarettes.

Senate President Aquilino Pimentel, Senate President Pro Tempore Sen. Franklin Drilon, Minority Leader Sen. Ralph Recto and Sen. Risa Hontiveros-Baraquel jointly filed a resolution directing a legislative review of Republic Act 10351 to assess the effectiveness of a unitary tax system in reducing alcohol and cigarette consumption before considering any amendments to the law.

“The review is timely and necessary considering that it has been five years since the passage of RA 10351,” the senators said.

The four lawmakers said the review is required under Sec. 11 of RA 10351 through the Congressional Oversight Committee on the Comprehensive Tax Reform Package.

Under the time frame provided by the law, the review should have been conducted in the third quarter of 2016. The law was passed in 2012 and implemented in 2013.

Drilon and Recto – considered the “fathers” of the current Sin Tax Law – have vigorously pushed for a unitary tax regime after a four-year transition from a two-tier regime.

The Southeast Asia Tobacco Control Alliance (Seatca), meanwhile, reaffirmed its support for RA 10351, which it said has been effective in reducing smoking especially among the youth as well as providing funds for universal health coverage of poor families.

“To build upon the gains of the Sin Tax Law, the Philippine government should maintain the unitary structure and further increase rates to continually and substantially reduce tobacco use, “ said Sophapan Ratanachena, tobacco tax program manager of Seatca.

Ratanachena said while the two-tiered tax system under House Bill 4144 may appear more equitable, but in reality it would encourage the young and the poor to smoke lower-priced cigarettes, exposing them to the very real risks of addiction, diseases, disability, and early death.

HB 4144, filed by ABS partylist Rep. Eugene Michael B. de Vera, proposes a two-tier system by imposing a tax of P32 per pack on cheaper cigarettes and P36 per pack on premium brands. It seeks to amend the Sin Tax Reform Law.

The Tobacco Control Atlas by Seatca records both the progress and the gaps in tobacco control in Southeast Asia.

According to Seatca, all other ASEAN countries, except Indonesia, impose a unitary rate on cigarettes (whether ad valorem or mixed specific and ad valorem).

A recent monograph of the US National Cancer Institute and the World Health Organization has estimated the global economic costs of tobacco at $-1 trillion annually and recommends stronger tobacco control measures, particularly taxation.