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Sin tax advocates: This is a Recto ‘Morris’ report

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Senator Ralph Recto. INQUIRER FILE PHOTO

Did smoke get in his eyes, making him cry a watered-down sin tax reform bill?

Finance Secretary Cesar Purisima and Health Secretary Enrique Ona, along with civil society groups, expressed disappointment with Sen. Ralph Recto’s ways and means committee report Wednesday on the Senate version of the bill raising hefty taxes on tobacco, beer and other alcoholic drinks.

In his sponsorship speech, Recto presented what he called a “reasonable, realistic and responsible” rendering of the sin tax bill that aims to generate P15 billion in incremental revenues in the first year compared to the P60 billion targeted by the Department of Finance based on its version.

“We thank Senator Recto for his efforts, but they fall short of what we need,” Purisima said.

“I’m very disappointed with the report. The sin tax bill must be credibly passed, or our universal health care will suffer,” Ona said.

Not a Recto report

 

Said Filomeno Sta. Ana of the Action for Economic Reforms: “This is not a Recto report; it’s a Phillip Morris or a Recto Morris report. Recto has declared war, and war we will engage him.”

Recto’s bill seeks to earn an additional P1.38 billion in excise taxes from distilled spirits, P3.81 billion from beer and other fermented spirits, and  P9.8 billion from tobacco.

“In pegging revenue yield, we adopted a conservative framework that we believe hedges closer to reality. The problem with forecasting revenues using rosy lenses is that they often leave the government in the red,” said the chair of the Senate committee on ways and means.

Recto said that while the original version peddled the promise of P60 billion in incremental earnings for the first year, subsequent “revenue scenarios” drawn up by government tax experts using elasticity tests and average industry growth produced yields way below what was promised.

He said the committee’s revenue projections were “not plucked out of thin air but were faithfully based on the submissions of the BIR (Bureau of Internal Revenue).”

 

Schedule

Recto’s bill adopted the following schedule:

  • Distilled spirits with net retail price (NRP) of less than P90 will have a P20 tax while those priced between P90 and P150 will have an P80 tax; those between P150 and P250 will have a P160 tax while those with a net retail price or more than P250 will be taxed P320. This will be revised every two years, with the NRP cutoffs as well as the excise tax rates increasing by 8 percent.

  • For wines, those with a net retail price of not more than P500 will be taxed P250 while those whose net retail price is more than P500 will be taxed P700.

  • For beer and other fermented liquor, the current three-tier regime will be collapsed into two tiers using the per liter net retail price cutoff at P50.60 effective March 1, 2013.

  • Beer products whose net retail price is not more than P50.60 will be taxed at P13.75 while those with higher than P50.60 will get a tax of P18.80.

  • The tax on beer brewed and sold in microbreweries will go up by 36 percent from P20.57 to P28 per liter.

  • The tax rates will be increased every two years.

Cigarettes and tobacco

Recto said that beginning March 1, 2013, the tax on a kilo of tobacco prepared but not for chewing would be increased by 47 percent.  The tax on a kilo of tobacco prepared for chewing will be increased by 60 percent.

He said that for cigars, the current two-tiered NRP-based structure would be retained, but the ad valorem rates will be increased starting March 1, 2013.

Hand-packed cigarettes will have a tax increase of 121 percent from P2.72 to P6 per pack beginning March 1, 2013.

Recto said that while the tax on premium cigarettes would be reduced to P14—representing a 51-percent drop in excise tax due per pack on the first two years, the tax on other classifications of machine-packed cigarettes would be increased.

Low-priced cigarettes will be imposed a significant 121-percent increase from P2.72 to P6 per pack of 20s; mid priced cigarettes, a 32-percent rise from P7.56 to a P10 tax, and high-priced cigarettes, a 17-percent increase from P12 to P14 tax per pack.

Recto said that starting March 1, 2015, the restructured system would be reformed so that the net retail price cutoffs shall be P15 and P18 per pack of 20s and the excise tax rates increased. Thus, cigarettes with a net retail price of less than P15 would be taxed at P7.50; those priced between P15 and P18, a tax of P10.50, and those priced (excluding taxes) at more than P18, P14.50.

Collections higher this year

Excise tax collections from alcohol and tobacco in 2011 reached P50 billion, he said, and that this was expected to be surpassed this year.

“This measure adds P15 billion on the first year. Whatever the final amount that will be plowed back to taxpayers, it will be at a level that will improve the lot of beneficiaries. This bill identifies a raft of recipients who will receive the rebates,” Recto said.

“True to its billing, most are health-related mandates, from PhilHealth premiums for the poor to rural hospitals,” he added.

Recto said there would also be something for tobacco farmers “to ease their transition to other crops.” He said the bill proposes that P1 billion a year be given to provinces producing burley and native tobacco for alternative projects.

For the health sector, Recto said the bill earmarked 50 percent of the total sin tax proceeds to the public health sector, “which amounts to roughly P33 billion, of which 40 percent will go to PhilHealth to benefit at least 10.4-million families.”

“The balance of 10 percent, or P6.5 billion, will be equally distributed among regional hospitals of the Department of Health and district hospitals run by LGUs (local government units),” Recto said.

“Thus, each of the 16 regional hospitals will receive P200 million while each of the 618 LGU-run district hospitals will get P5.25 million annually,” he added.


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Tags: Government , Legislation , Public Health , Ralph Recto , Senate , sin tax bill


  • Fulpol

    Robert Blair Carabuena of Philip Morris slapped Sen. Recto…

  • farmerpo

     Tobacco farmer ba si Sen Recto? Baka may tabakuhan sa ibang bansa kaya? Walang tax na sinasabi tungkol sa imported cigarettes na idina dump dito sa Pinas. Minimum PHP20 tax per pack of 20 dapat. Make suicide an expensive endeavor.

  • rightist

    Cigarette taxes should make it very prohibitive for teenagers to try to start smoking. We can start at 50 pesos tax for the cheapest pack. We should also follow Australia’s strict tobacco labeling laws to make cigarette packages bland, generic, gross, and uncool. By 2050, the Philippines should be tobacco free for those 35 and below.

  • Bengatibo

    Magkano ang pera na-inilabas nang Philip Morris para maging favorable sa kanila ang Recto Report?

  • bisdak2008

    I( hope this has nothing to do with the campaign fund oh his wife Vilma Santos. After eVAT, RectoMorris.

  • kalealaskador

    Senator Recto is correct. The selling price of alcoholic drinks and cigarettes will effect the demand for these products. If the sin taxes are too high, the retail prices will definitely go down. The higher the retail price, the lower the demand. Despite the increase in taxes, the government may end up collecting less simply because the products are not selling as they used to be.

    The increase in retail prices will also encourage smuggling of these products. The “blue seals” will once again be in the open market. The lower income groups will satisfy themselves with home-brewed drinks like lambanog, tuba, basi, etc.

    • damatannapo

      Paano magkakaroon ng smuggling kung mahal rin ang sigarilyo mula sa abroad? kikita kaya ang smuggler? tanong ko lang po
      Maari pang mangyari ang pagdami ng mga fake branded na sigarilyo mula sa China

      • Guest

        Sabi nga ni Recto, yung Senate version ng sin tax bill  was designed not to promote smuggling and illicit trade as warned by experts. Kung masyado nga naming malaki, talagang magiging talamak ang smuggling ng cigarette sa bansa.

      • damatannapo

        Malaking mura ang sigarilyo natin dito sa Pilipinas sa ngayon kumpara sa maraming ibang bansa liban lang sa China

      • kalealaskador

        Pagtaas ng tax, tataas ang retail price ng cigarilyo. Sigurado mas mahal ito kaysa sa mga smuggled na yosi! Kung damatan ka na, maaalala mo ang mga “blue seal” na Salem, marlboro, Pazll Mall at iba pa. Malaki ang kikitain ng mga smuggler.

      • damatannapo

        brad 11 USD x 43 ang Marlboro sa NYC sa Thailand paga 100 php ang isang kaha sa Singapore paga 350 petot ang kaha kaya kung pupunta ng Singapore nagbabaon pa nga At kung talagang may murang imported na sigarilyo dapat nagbaha na rin ng imported na sigarilyo dito sa Pilipinas tulad ng mga imported na chokolate sa SM ngayon

      • kalealaskador

        Magkano sa China, India, Indonesia? Pati yung mga gawa dito, marami hindi lalagyan ng BIR stamp!

  • $14334231

    universal health care will suffer?…magkano lang ba ang binabayad ng philhealth…..dapat 80%…hindi ‘yong kung ano ang gusto n’yo lang na ibayad…mas mataas pa ang binabayad ng pasyente…….

  • johnlordphilip

    I’m sure money from tax is an important issue here, but what about the more important issue of HEALTH? Most other countries are increasing taxes on tobacco and alcohol to discourage people from buying them, improve people’s HEALTH, thus improving the nation’s economy.
    THE HIGHER THE TAXES ON THESE PRODUCTS, THE BETTER FOR THE COUNTRY!!!!!

    • Karabkatab

      Or better still remove these products from the shelves.

  • http://profile.yahoo.com/45JYBDVWBJ3QNFJQ6NGUCRWL7I Noree

    Kung masyadong mataas ang presyo ng sigarilyo at alak dahil mataas ang tax, kokonti ang bibili. eh di hindi rin makukuha yung target revenues ng gobyerno. Kung kulang ang koleksyon eh di wala rin mapupunta sa health care. Lawmaking is a balancing act. You have to consider all aspects, including the interests of govt, workers, tobacco farmers and users of the products. Hindi lang naman interest ng gobyerno ang dapat tingnan kundi lahat ng sector an apektado.

  • xmb458

    Itong si Ukay-ukay EVAK SA ULO na Recto na ito ay nakalanghap na naman yata ng second hand na smoke. Noong ginawa niya ang EVAK Law niya ay naghirap at nagkamatay ng maraming Pilipino sa kahirapan ng dulot ng nito. Ngayon naman ang dapat taasan ng buwis ay heto na naman ang second hand king na ito na na gustong babaan..at dadami na naman ng mamatay dahil sa paglaklak ng alak at pagsinghot ng sigariyo. Hoy! ukay-ukay ogag ka!  ang harapin mo na lang ay yong asawa mong ukay ukay!…ndot ka! 

  • JIMBOYPALABOY

    ok kay lang kay VATMAN ang 12% tax sa kuryente, tubig, pagkain at gamot. pero ayaw nya taasan tax sa tobacco. baka daw magalit sa kanya si Kapitan. wala na raw siyang malalapitan sa muling paglipad ni darna sa Mayo.

    hahaha.

    • karmarroyo

      Imagine P9.8 to P14.8 billion from cigarettes pero sa alcohol P5.2B to P7 B lang ang revenue. Di ba malaki ang disparity.

  • damatannapo

    Ang pagtaas ng buwis sa alak at sigarilyo ay paraan upang mabawasan ang pagtangkilik sa mga bisyong nakakasama sa kalusugan, ito ang tunay na layunin hindi ang tax revenue. Mali ang pananaw ni Senator Recto

    • KapitanBagwis

      Malaking lobby money ang natanaw ni Recto Morris 

      • GustoKoHappyKa

        tatakbo si ate V eh..kailangan ng pondo!!!

  • http://pulse.yahoo.com/_I4MZTFGCRWI6D5ER5MNPWLUQ2Q samuel

    Ha ha ha Bisyo nga kaya masama sa kalusugan kung Pwede nga totally banned, Smuggling? leave it to the customs and coast Guard. Recto Proposed Evat that affect low income People how he Can Never do the Same to Big and Rich Company. If their sales will go down, then who cares as long as no or less Filipino will suffer the disease produce by Cigar and Liquor. Only few cigarettes company in the philippines could this company affects Philippine economy. If People have the money then he can buy a cigarettes if no then he will stop using cigarettes and Drinking Liquor. 

  • http://pulse.yahoo.com/_6S5WY2V6JJ3CCL42UZAZCBH3JQ Third

    What’s the point of joining the administration when you wont support its landmark policies? This is a clear proof that PNoy made the wrong decision of adopting Recto (who was previously with GMA) into the Liberal Party. I’m not saying that one should blindly follow PNoy, but I think it’s pretty clear that the purpose of increasing the taxes for tobacco and alcohol is to generate additional revenues, considering that big companies earn billions at the expense of the ordinary citizens and the government that spends more than 5 times the revenues it gets from tobacco taxes. It’s also clear that the bill aims to reduce the number of smokers, especially minors, who spend on their vices rather than the more essential goods. Recto’s report might as well include the letterhead of Fortune Tobacco. Obvious na obvious e.

  • http://pulse.yahoo.com/_SC573R5VTMJ6ISRH635DJ2XVLI San

    Something smells fishy. The usual strategy of Lucio Tan’s lobbying.  Cheaper to pay off the politicians.

  • http://pulse.yahoo.com/_3TWVIBNBHJIBKXLUC5IT2JYM5E Harry

    Increase sin taxes and lower the EVAT.

    • jga94

      Tama!Itong si Recto halatang anti-health….nagpasimuno ng EVAT…ngayon ito namang pinababa na proposed increase sa taxes ng sigarilyo….halatang-halata rin na cahoots sya with the tobacco industry…bakit yung sa alcohol products, wala siya masyadong binago from the House version?

      Remove VAT from essential medicines….lower or totally remove VAT on medical professional services (except for non-essential procedures/consults)….increase taxes on these disease-causing agents….

    • GustoKoHappyKa

      well….mas gusto nila pahirapan ang mga mamayan kesa sa mayayaman! yan si mr evat!!!

  • binatangtagabukid

    may pa 60billion pa nalalaman si purisima eh d nmn nakokolekta ng maayos buwis, ayusin lng trabaho ng BIR cgurado sobra pa makukuha ng gobyerno wag paboran mga mayayaman

  • divictes

    Ghost of EVAT past.

  • KapitanBagwis

    How much lobby money Sen Recto Morris?

  • AntiAko

    ISA KA PANG PASAWAY! RESIGN KA NA NGA LANG RECTO!

  • tilney

    Do not vote Ralph RECTO for senator in 2016 and his wife Vilma Santos Recto as Governor in Batangas in 2013 .Remember the EVAT during GMA time.

  • http://profile.yahoo.com/THFWCPOYTHUNH4WPXIWOBVQZ3U Lone Ranger

    Hinding hindi ko iboboto yang si Recto. Bakit hind 121% increase sa lahat ng klase ng cigarettes? Bakit yung mura lang ang may ganong kalaking increase at maliit lang ang increase pag mamahaling brand? Recto paki-explain?

    • Guest

      Hindi nila dapat tirahin si Recto, ginagawa lang niya ang tama. Hindi naman siya nasa kaliwa o nasa kanan. Nasa gitna lang siyang, walang kinikilingan.

    • Guest

      Hindi water down  ang version ni Recto ng sin tax bill, dinaan lang talaga sa masusing pag-aaral at base na rin sa mga position ng iba’t ibang stake holders.

      • GustoKoHappyKa

        nahhh…yung kikitain na tax dyan mapupunta lang sa pagbayad sa philhealth.. walang silbing tax…

        kung tataasan yan tax..mamahal ang sigarilyo..at mababawasan ang mga nag sisigarilyo.. ang perang gagastusin sa pag papagaling nila eh mapupunta sa ibang bagay…

  • Guest

    Disappointed ang Palace sa sin tax report ni Sec. Recto. What’s wrong with that? Reasonable at balance naman ang projection niya.

  • http://pulse.yahoo.com/_ZWTTKJTI57YO7TZBJC66GA2OLU dennis

    Favor naman ako sa “sin tax” kasi wala naman atang balak gumawa ang gobyerno ng program para mabawasan ang may bisyo sa katawan eh?Tutal kung hindi lang naman mababawasan ang bisyo na uminom ng alak at manigarilyo eh dapat lang patungan ng mataas na tax. Kung hindi natin gagawin yan eh hindi natin mabibigyan ng disiplina ang buhay natin! Ang tao,pwedeng mabuhay ng walang bisyo,pero ang walang makain at mainom na tubig eh lalo namang magiging kawawa ang dadating pa natin na generasyon!

  • http://pulse.yahoo.com/_ZWTTKJTI57YO7TZBJC66GA2OLU dennis

    Ang mabigat na kalaban ng may bisyo eh yung sinasabi natin na “Withdrawal Syndrome” regarding Alcohol and Cigarettes…Eto ang dapat pagtuunan ng gobyerno na gumawa ng “health program” para mapaglabanan ang mga ito.

  • Guest

    Disappointed si Sec. Drilon at Sec. Pia Cayetano kasi di yan ang gusto ng BAT. Ang gusto ng BAT yung House approved version ng P31B revenue target from sin tax.

  • Guest

    Bago humirit ng additional funds si Sec. Ona mula sa share sa sin tax, gastusin muna ang pondo
    for health service from 2011-2012. Ilabas niyo muna at gamitin yan.

  • http://pulse.yahoo.com/_ZWTTKJTI57YO7TZBJC66GA2OLU dennis

    Sa tutoo lang,this will benefit not only our economy but the people as well! We are killing “2 Birds in one shot”! For example,sa tutoo lang,Philippines has the lowest retail price kung magbenta ng Alcohol at cigarettes sa buong mundo! Sa US,pinakamababa na ang 5 dollars ang pack ng cigarettes at sa Europe eh 4 Euros! Now,THINK!

    For example: Marlboro is 4 Euros or 5+ US Dollars.In Philippines let say,40Php per pack ang Marlboro! The rate of 1 Euro = 55 Pesos(average) Tanong: Can we afford to pay 200php Marlboro/pack?….Syempre Hindi!…So,those with vices will ALWAYS find a way to satisfy him/her!….So,bibili ng mura! (Philippine owned products!)
    Now,here is the deal,Itaas ang sin tax BUT in exchange for not raising prices of food and water! Hindi magkakaroon ng reason ang gobyerno para itaas ang mga prices basta-basta kung malaki na ang kinikita sa sin tax! In that way,marami ka pang natulungan na tao na maalis ang bisyo!…Just my 2 cents of opinion!

  • http://pulse.yahoo.com/_Q3QGG5QHBLRMZTIYWUFURY6J2E Night

    bilyon siguro nakuha ni recto dito???

  • Chloroform

    “I’m very disappointed with the report. The sin tax bill must be credibly passed, or our universal health care will suffer,” Ona said.
    if everybody stopped smoking and drinking then there will be no sin tax and will  the universal health care suffer? hehe. I hope they made a market study on how many (estimate or prediction) will stop smoking at different price increases of cigarettes…

  • pabulaka

    Sen. Recto has no qualms in enacting the VAT by 12% to the Filipino people but he takes pity on the cigarette makers and distillers so he watered down the tax. His argument that with the higher sin taxes, less will be smoking and drinking, hence, less revenues for the government. Less smokers and drinkers will reduce the health care cost being paid out by the government as well and could even be better since more people will be saved. HELLO!!!!!!!!!!!!!!!!

  • http://pulse.yahoo.com/_7W7IOOVSMXPI4IM4SMGC47FS7I larry

    kung talagang seryosong sugpuin ang bisyo at attendant illness becoz of smoking at para matigil na rin ang away tungkol sa sin tax, declare to ban smoking sa buong pinas, sige nga! 

  • http://twitter.com/kintoy Boardinggate101.com

    ang Recto na walang Claro

  • http://pulse.yahoo.com/_NR3E23UPGQ5LWE6XQMDNK5NLWU Edgar Angelo

    Dapat walang minors na nagbibisyo… para hindi na madagdagan ang nagbibisyo… may batas naman yata tayo para jan pero hindi lang napapatupad…

    Hindi solusyon ang sin tax…  madadagdagan lang ang corruption… 

  • $53950194

    I like Senator Ralph Recto EXCEPT on this Sin Tax Bill.  Why he is not heeding to a better deal , while the government is generating revenue at the same time it is discouraging people drinking & smoking.

  • Camille Tayson

    Paliwanag nyo naman po itong report na to in tagalog. Kailangan ko lang po.. Please.

  • Camille Tayson

    Pano ba ‘to? Need lang sa report. Patulong naman po. Please..

  • spearheads

    A sin tax main purpose is to raise revenues but when it imposed irrationally, it will kill the “goose that lays the golden egg.” Unless the purpose of these critics is the latter then they are indeed irrational. I don’t buy the convenient excuse that Recto is working for the tobacco manufacturers like Philip Morris and the malicious suggestion that he might have received some bribes since manufacturers always pass upon the buying public whatever additional levy is imposed by the government. But the ultimate effect would killing the tobacco industry since people cannot afford to buy it anymore and will have to quit with their vices. Imagine one stick of cigarette costing 5 pesos? Si PNoy na lang matitirang maninigarilyo nyan, di ba? I fully support Recto on this issue. 

  • My mom

    I FULLY support Sen. Ralph Recto. The Senate version of sin tax reform legislation is far more reasonable and definitely within bounds of the Constitution. The Lower House version being peddled by DOF/DOH gives a tax-free holiday to imported cigarettes, beer, and liquor – while imposing a shocker of a 708 percent tax hike on cigarettes consumed by the poor, the largest tax hike the world has ever known. Why, that’s not consistent with the constitutional mandate for taxation that is progressive (not anti-poor), equitable (not pro-beer and liquor), and uniform (not pro-imported). The anti-tobacco lobby is rooting for a law that wantonly violates constitutional safeguards. That’s how the Cybercrime Prevention Act by the was signed by the Senate and the President and knocked down unanimously by the Supreme Court with a TRO, When will we ever learn?

    • Ray_G

      Huh??? Have you been off your meds again?



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