Civil society, health groups back Drilon’s version of sin tax bill

Senator Franklin Drilon

MANILA, Philippines – Civil society and health advocates on Friday expressed support for Senator Franklin Drilon’s version of the sin tax bill.

“We strongly support the measure that Senator Drilon has crafted,” said Filomeno Sta. Ana III, coordinator of Action for Economic Reforms.

“It contains the essential reforms, especially the life-saving measures that are found in the other good bills, like the Miriam Santiago bill and the Lacson Bill. It is likewise a significant improvement of the amended Abaya bill.

Drilon’s amendments for cigarettes include a reduction to two tiers, P12 for low-priced and P28.30 for medium and high-priced brands. Tax rates would be unitary at P32 by 2016 with a subsequent 5 percent increase every year effective January 2017.

On the other hand, amendments for distilled spirits include a combination of P30 and 30 percent of the net retail price (NRP) by 2013. Fermented liquor would be classified into two tiers based on different NRPs.

Sta. Ana said Drilon’s version had similarities to the Lower House version of the bill but he pointed out that it also “adopted features of Senator Miriam Defensor-Santiago’s bill.”

“Of course we can still push for some improvements. For example, higher indexed tax rates based on nominal gross domestic product per capita growth. An indexation to nominal GDP ensures that the rates keep up with inflation and increases in income to prevent alcohol and cigarettes from being more affordable over time,” he stressed.

He said other amendments can include a movement towards a unitary tax rate for beer, safety nets for workers and a review mechanism to ensure that the sin tax rates will continue serving health and revenue objectives and will be in compliance with international commitments, such as the Framework Convention on Tobacco Control.

Health Secretary Enrique Ona earlier said that while Drilons’ version of the sin tax bill met the minimum revenue target of government, the Department of Health would like the Senate to pass a bill that would raise P60 billion in “sin” taxes.

Ona said the Drilon version, expected to raise P40 billion in revenues, met the “floor” estimate that government experts said would be enough to reduce the number of smokers in the country while providing funds for the healthcare coverage of 5.6 million more “very poor” Filipino families.

Ona said that the sin tax bill would be important in making sure that future administrations would no longer have to seek funding from Congress every year for the health care coverage of the “poorest of our people.”

He pointed out that the bill’s passage would lead to an increase in cigarette prices to discourage the youth from taking up the smoking habit.

“It is very important for us that cigarette prices should go up so that they would be beyond the reach of our youth,” he said.