‘Approval of higher tobacco taxes ensures adequate funds for UHC’

MANILA, Philippines — The government will have enough funds for the expanded health care program with the approval by Congress of the bill increasing the excise tax on cigarettes and other tobacco products.

“Based on projections made by the Department of Finance (DOF), there will not only be sufficient money for the program but there will even be a surplus,” Quezon Rep. Angelina Tan, who chairs the House of Representatives committee on health, said yesterday.

She said the projected additional collections would be more than enough to fill the expected funding deficit for the recently signed Universal Health Care (UHC) Act, which aims to extend inpatient and outpatient health services to more than 100 million Filipinos.

“We hope the DOF is right in projecting a surplus, which the Department of Health (DOH) and PhilHealth can use for more free services,” she said.

Tan is one of the authors of the UHC law, which President Duterte signed in February. She is also an author of the tobacco tax increase bill, which the House would shortly send to the President for signing into law.

Based on previous DOH and DOF estimates, the expanded health care program would entail a total annual cost of P257.5 billion next year, P271 billion in 2021, P286.3 billion in 2022, P302.4 billion in 2023 and P319.4 billion in 2024, for a total of P1.437 trillion over the five-year period.

Funding from the national government, including PhilHealth and the Philippine Charity Sweepstakes Office, was estimated at P195 billion on the first year, P199 billion on the second, P201 billion on the third, P207 billion on the fourth and P210 billion on the fifth year, for a total of P1.012 trillion, or a cumulative deficit of more than P400 billion.

However, the DOF projects that the bill increasing the tobacco excise tax and imposing a levy on e-cigarettes would bring in an additional P130 billion next year, P136 billion in 2021, P142 billion in 2022, P147 billion in 2023 and P151 billion in 2024, for a total of P706 billion.

Thus, funds for the program over the five-year period from existing sources plus additional tobacco tax collections would amount to P1.718 trillion.

Since the estimated total cost of health services to be extended is P1.437 trillion, this means that the government could realize a surplus of P281 billion.

Camarines Sur Rep. Luis Raymund Villafuerte, another author of the UHC law, said without a steady funding source for the program, PhilHealth would continue paying for only 18 primary care drugs and seven health conditions.

“But with the tobacco tax hike, PhilHealth coverage will expand to 120 drugs and there will be no limit on primary care treatment,” he said.

The House and the Senate approved the increase in tobacco tax shortly before they adjourned their third and last regular session on Tuesday.

Under the proposed law, the excise tax on cigarettes will go up by P10 per pack to P45 from the current P35. This will gradually rise to P50, P55 and P60.

The House also approved a separate bill adjusting levies on beer, liquor and other alcohol products, but the Senate failed to pass it.

Like the tobacco tax measure, the alcohol levy bill proposes to allot incremental collections to the expanded health care program.

According to outgoing Quirino Rep. Dakila Cua, former ways and means committee chairman, the last time Congress adjusted the tax on alcohol products was in 2011.