Palace wants House sin tax version

Malacañang wants the Senate to adopt the sin tax reform bill that the House of Representatives approved Wednesday, saying the legislators’ move has brought the country closer to reforming the current tax regime for tobacco and alcohol products which has been proven “ineffective” and “outdated.”

If enacted into law, House Bill No. 5727 is expected to increase taxes levied on the so-called sin products.

“Should the Senate move in the same direction as the Lower House did, the updated sin tax system will certainly boost tax efficiencies in the country, as well as increase government revenues by around P33 billion in the first year of its implementation,” Budget Secretary Florencio Abad said in a statement, lauding the House of Representatives’ “groundbreaking move.”

Abad said most of the funds will be directed to critical health services, including health coverage for indigents and informal sectors under the National Health Insurance Program, as well as the development and rehabilitation of various health facilities in several regions and provinces.

“Once approved, 15 percent of sin tax revenues will also be used to support tobacco farmers, who may be adversely affected by the measure,” Abad said.

“Tobacco- and nontobacco-growing provinces will likewise have a share in the revenues generated by an updated excise tax regime,” he added.

Abad said that in its original form, HB 5727 was expected to generate at least P60.7 billion, which will be channeled to 81 beneficiary provinces. He said the target provinces were a far cry from the 16 provinces now being supported by the present excise tax scheme.