Gatchalian: No more bicam talks on tobacco taxes cut

Sen. Sherwin Gatchalian —Niño Jesus Orbeta

MANILA, Philippines — A Senate hearing on Monday that tackled a House bill seeking to roll back excise on tobacco products only served to effectively kill that measure, or at least block its further deliberations in the bicameral conference committee.

Presiding over the hearing by the Senate committee on ways and means which he heads, Sen. Sherwin Gatchalian assured critics of House Bill (HB) No. 11360, which they described as the “sin tax sabotage bill,” that he would not allow any discussion proposing changes to the sin tax law (Republic Act No. 10351) covering alcohol and tobacco products.

Gatchalian said his panel would only tackle the provisions on vape products in HB 11360, which the House of Representatives passed on third and final reading merely five days after it was filed on Jan. 28.

READ: Advocacy group: Illegal cigarette, vape trades worsen public health

Critics of the bill led by the Sin Tax Coalition had argued that the measure, which they also described as a “protobacco bill,” would have no impact on deterring smuggling, adding that its primary solution is “tough and consistent enforcement of the law.”

The group had also expressed concern over the Senate tax panel’s hearing on the measure when Congress was on recess. It said Gatchalian should instead file a separate measure on increasing taxes on vapes instead of conducting a hearing which would only serve as a “platform” for the tobacco industry.

‘Best solutions’

Gatchalian, practically agreeing with the bill’s critics, said “we did not see that lowering down taxes can combat [tobacco smuggling] effectively.”

He also agreed that effective law enforcement and prosecution were the best solutions against the illegal trade of cigarettes—as also affirmed in three previous hearings by his panel, he said.

“The reason for that is that we don’t believe that the solution to curbing illicit trade will come from the reduction in taxes. We don’t believe in that,” the senator stressed.

“We believe in strengthening the enforcement agencies, coming up with new mechanisms, such as incentives for our enforcement agencies, in order to curb illicit trade in our country,” he added.

Regarding vapes and other heated tobacco products, he said a “unitary” tax system should be adopted that would help curb the use of those products.

Testifying at the hearing, Dr. Anthony Leachon also agreed that raising taxes on cigarettes and vapes would be a “win-win solution,” since their manufacturers were targeting young Filipinos.

“If we start increasing the tax rates [on vapes with] the same level of vigor, then we can actually prevent the onslaught of noncommunicable diseases such as stroke and heart diseases,” said the cardiologist and public health advocate.

Leachon said further that HB 11360 would contradict the principle of “price deterrence, which has proven to be one of the most effective components of tobacco control policy by reducing consumption among vulnerable sectors, such as the youth and low income groups.”

“Allowing this measure to pass is tantamount to reversing and undermining the public health gains we’ve made from the implementation of sin taxes,” he said. “[The bill] incentivizes and legitimizes an industry that profits from addiction despite overwhelming empirical data that tobacco products cause real and lasting harm.”

Defer to next Congress

Dr. Antonio Dans, a fellow at the National Academy of Science and Technology, pointed out that HB 11360 contained provisions that would increase by only 2 percent the tax on tobacco products every even-numbered year starting in 2026, much lower than the scheduled 5-percent tax hike under the current revenue code.

“That is a major concern of the organizations of health-care professionals because if this will be subjected to a bicameral committee hearing, that provision can be used to actually implement a rollback on the tax [on cigarettes],” Dans said.

Gatchalian assured Dans that “as long as I’m the chairman of this committee, I will not agree to include that cigarette [tax] provision in the bicameral committee report.”

Referring to his counterparts in the House, Gatchalian said: “If we don’t agree, then so be it. We’ll talk again during the 20th Congress.”

He said his committee report would only focus on his proposal to have a single tax system on heated tobacco products.

Gatchalian also chided the Department of Trade and Industry for being remiss in its duty to regulate the sale of those products.

“If we don’t enforce [the law], if you are just in your offices, nothing will really happen,” he said. /cb