‘Sin’ taxes aim to make alcohol, cigarettes expensive, says solon

Senator Pia Cayetano. INQUIRER FILE PHOTO

MANILA, Philippines—One of the objectives of the proposed increase in “sin” taxes by the government is to make alcohol and tobacco less accessible, Sen. Pia Cayetano indicated to industry leaders during the hearing of the Senate panel on ways and means earlier this week.

Industry leaders had argued that the proposed tax hikes the government is pushing in the Senate discriminate against the poor because low-priced brands would be levied the highest tax rates instead of premium brands patronized by the wealthy.

Cayetano, the chair of the Senate committee on health, indicated the government’s duty to protect the people’s health by limiting access to so-called sin products by raising taxes levied on their sale. She added the government needed to raise revenues for its health programs.

“To raise revenues and to protect health. So given that, there will be a change,” Cayetano said during the hearing on the proposed tax measures on Thursday.

“So in as much as you would argue that you would want to keep the prices low, the lower it is, the more accessible it is to the people and that is a fact that will always be in contention because you would still want to make your products still accessible,” she added.

Cayetano said it was up to the industry to shift products if they wanted to address the livelihood concerns of those dependent on alcohol and tobacco items for employment and livelihood.

She added the tax rates on alcoholic drinks were one of the lowest in the region and it was time to raise them.

“Yes, there will be a contraction. Isn’t that what we must do if we are responsible citizens, that we do not want products that are not good for your health to continually penetrate the market at a growing rate?” Cayetano said.

Cayetano pointed out that when soft-drink makers in other countries saw there was a strong move towards healthier products, there was a shift in the products that they sold.

“So don’t make that government’s burden to make sure that your products, which are not healthy products, are accessible to the poor. It’s up to you to address that. Maybe it’s high time you consider introducing other products in the market,” Cayetano said.

Asia Brewery Inc. (ABI) vice president Enrique Martinez said low-priced brands like Gold Eagle, Beer Na Beer and Colt 45 would have the biggest tax increase of 107 percent and 140 percent under Senate Bills Nos. 2763 and 3249, respectively.

ABI is concerned the exorbitant excise tax increase will result in higher retail prices that will make even the low-end brands beyond the reach of ordinary consumers.

“The pending bills are discriminatory to consumers with low income and the excessive tax increase will also encourage smuggling and counterfeiting,” Martinez said.

He said ABI’s sales volumes would be wiped out by the proposed 140 percent and 107 percent tax increase under the two Senate bills, thus resulting in the closure of some plants, retrenchment of workers and reduction of business with suppliers of raw materials.

In a statement, ABI said House Bill No. 5727, approved by the House and which is also being considered by the Senate, imposes a 32-percent tax increase on low-priced brands but exempts the mid- and high-priced beer products from any tax hike on the first year in 2013.

ABI said mid-priced brands would only have a tax increase of 39 percent under SB No. 2763 and 61 percent under SB No. 3249. High-priced imported brands, on the other hand, will have the smallest tax increase of just five percent under SB No. 2763 and 21 percent under SB No. 3249.