Malacañang insists sin tax bill not anti-poor

MANILA, Philippines - Malacañang yesterday disputed claims from certain sectors that the proposed sin tax reform measure is “anti-poor,” saying this would even enhance the public’s access to health services while discouraging vices that cause diseases.

Manuel Mamba, chief of the Presidential Legislative Liaison Office (PLLO), said the funds to be generated by the measure would support key projects that could benefit the poor.

“This measure is not anti-poor. It is pro-poor. If we want to help the poor people, let us not introduce to them the bad habits of smoking and drinking too much liquor,” Mamba told radio station dzRB.

“By regulating these (sin products) and not making them accessible, we’re helping them out. The taxes to be paid will go to health care,” he added.

Mamba said the taxes slapped on alcohol and tobacco products in the Philippines are comparatively lower than those imposed in other countries.

“We should do this for health reasons and taxation purpose,” the PLLO chief said. “We should raise (the taxes on tobacco and alcohol) to discourage new entrants, especially the youth.”

The reformed sin tax bill could generate as much as P70 billion in additional revenues yearly, according to the Finance department.

Republic Act 9334, which was enacted 2004, mandates tax increases on alcohol and tobacco products beginning January 2005 and every two years thereafter until 2011 to discourage people from patronizing the so-called sin products.

Tobacco products and alcohol were subdivided into various classifications with corresponding tax rates. Some experts said this system had resulted in revenue erosion since the taxes are not indexed to inflation or the rise in the level of prices of goods.

Bills seeking to reform and simplify the sin taxes have been filed during the previous Congresses but were bypassed.

The sin tax reform bill is one of the priority measures of the Legislative Executive Development Advisory Council (LEDAC).

Tobacco farmers and some lawmakers claimed that the sin tax reform bill is anti-poor as this could result in job losses. They believe that the measure has provisions that would favor importers over local manufacturers while imposing a tax burden on low-priced cigarettes.

They said the high prices would affect their families, as this would force them to cut down on their planting.

Malacañang, however, believes the measure would even provide more income to the farmers.

“It will provide competition, it will provide more income for our tobacco farmers because right now, the tobacco industry is controlled by only one group. It has a control of about 97 percent,” said presidential spokesman Edwin Lacierda.

“If you open it up, it will encourage competition. Our tobacco farmers will earn more. Their income will increase, “he added.

The Palace is hopeful that Congress will approve the measure before Congress adjourns this month.