Sin tax bill ratified

Senate of the Philippines. INQUIRER FILE PHOTO/JESS YUSON

MANILA, Philippines— The Senate and the House of Representatives on Tuesday ratified the bicameral conference committee report on the controversial sin tax reform bill, a day after the panel finished reconciling the disagreeing provisions of the versions of both chambers of Congress.

At the Senate, senators voted 10-9 to approve the report on a bill that seeks to impose higher taxes on tobacco and  alcohol products.

The reconciled version, once enacted into law, is expected to rake in P33.96 billion in revenues by 2013.

The bill will become a law upon signing by President Benigno Aquino III,who packaged it as a revenue measure meant to raise funds for the government’s universal health program.

It will also allocate 15 percent of the projected revenues will go to affected farmers and workers while 80 percent will go to health programs nationwide including universal PhilHealth coverage. Twenty percent of the remaining balance will meanwhile go to the provision of medical assistance and the upgrade of state-owned hospitals.

The 10 senators who voted to ratify the report  were Senators  Franklin Drilon, Panfilo “Ping” Lacson, Francis  “Kiko” Pangilinan,  Edgardo Angara, Pia Cayetano, Miriam Defensor-Santiago, Lito Lapid, Sergio Osmena,  Antonio Trillanes IV, Aqulino “Koko” Pimentel III.

The nine who voted against it were Senate President Juan Ponce-Enrile, Senate Pro Tempore Jose “Jinggoy” Estrada, Senate Majority Leader Vicente “Tito” Sotto III,  Senators Joker Arroyo, Ralph Recto,  Francis “Chiz” Escudero, Ferdinand “Bong-Bong” Marcos Jr,  Gregorio Honasan, and   Ramon “Bong” Revilla Jr.

“I can’t support a bill that destroys the local industry,” Enrile said.

It was Sotto who called for a nominal voting after Drilon, acting chairman of the Senate committee on ways and means, presented on the floor the bicameral report on the bill.

Drilon hopes to transmit the  bill to President Benigno Aquino  III within this week for signature.

Once signed into law, Drilon said, the  measure  will immediately take effect on January  1, 2013.

“I am glad that we were able to approve this reform measure which everybody has been waiting for in the past 16 years. We have achieved something that we really needed in order to really move our excise tax system forward, and I am glad that I have the support of our chamber,” he said in a statement.

For 2013, Drilon said the  government is expected to generate P33.96 billion in additional revenues by increasing the taxes on sin products such as cigarettes and alcoholic beverages.

“Of the amount, P23.4 billion will come from increased taxes on tobacco, while P10.56 billion will be generated from taxes on fermented liquor and distilled spirits depending on its historical burden sharing,” he said.

The final burden sharing between tobacco and alcohol products for 2013, Drilon said, will be 69 percent for tobacco and 31 percent for alcohol.

“It was a give and take situation and we came up with a compromise of approximately of 69-31 percent instead of 60-40 in the Senate and 87-31 on the part of the House,” he said.

The following is the total rate of excise taxes that will be collected on a five-year period, starting 2013 and ending in 2017:

For tobacco, the total increment for 2013 is P23.4 billion; P29.56 billion in 2014, P33.52 billion in 2015, P37.09 billion in 2016, and P40.9 billion in 2017 for a total of P164.47 billion.

For fermented liquors or beer, it’s P4.5 billion in 2013, P6.99 billion in 2014, P9.52 billion in 2015, P12.06 billion in 2016, and P15.646 billion in 2017, or a total of P48.53 B incremental tax in the period of five years.

For distilled spirits, it is P6.06 billion in 2013, P6.31 billion in 2014, P7.59 billion in 2015, P7.71 billion in 2016, and P7.82 billion in 2017, and therefore the five-year period would have a total of excise tax for the distilled spirit in the amount of P35.34 billion.

On a yearly basis, Drilon said, the total excise tax collection for 2013 from the three products is expected at P33.96 billion;  P42.82 billion in 2014; P50.63 billion in 2015;  P56.86 billion in 2016;  and P64.18 billion in 2017.

The total incremental revenues for the three products for a five-year-period would be P248.49 billion, he  said.

“Let me emphasize that insofar as the financial burden on the cigarette is concerned, we were able to achieve the Senate version,” he said.

” The Senate version imposed a P23.55 billion for cigarettes on year one, 2013,” said Drilon, adding “what we came out with is P23.4 billion, so that the financial burden in cigarettes is lower than the financial burden that we approved of in bicam.”

After deducting the allocations under Republic Acts 7171and 8240, 80 percent of the remaining balance of the incremental revenue will be allocated for universal health care under the National Health Insurance Program; the attainment of the Millennium Development Goals and health awareness campaigns.

RA 7171 is the act promoting the development of farmers in the Virginia tobacco producing provinces, while RA 8240 amends certain sections of the National Internal Revenue Code.

“The taxes that will be collected for next year will cover another 5.2 million Filipino families, the second tier of the poorest sector of society. For this year, 5.2 million Filipino families have been covered by PhilHealth. This is on top of 5.2 million poor Families already covered under the General Appropriations Act for 2013,” Drilon said.

“By 2014, the entire budget of about P25 billion for PhilHealth premiums to cover 10.4 million families will now come from the sin tax,” he further said.

Drilon said the remaining twenty percent will be allocated nationwide “based on political and district subdivision for medical assistance and health enhancement facility programs, the annual requirement of which will be determined by the Department of Health.”