Gov’t expects P44 billion from ‘sin’ taxes

Additional funding earmarked for expanded healthcare coverage

PROTECTING the gains being reaped from the implementation of higher taxes on tobacco and alcohol is now one of the government’s top priorities to make sure the expanded healthcare coverage financed by the addi-

tional revenue fund is not scaled back.

Raising excise or “sin” taxes, which passed successfully in late 2012 after languishing in Congress for 14 years, has become one of the symbols of the Aquino administration’s fight for reforms in the face of stiff opposition, economic managers said.

“This is one of the most difficult things I’ve had to do in my four years of service in government,” Commis- sioner Kim Henares of the Bureau of Internal Revenue (BIR) said yesterday, referring to the campaign in late 2012 to pass higher excise taxes.

Her comments came just over a year after Republic Act 10351 was signed into law by President Aquino. By 2016, a mandatory congressional review of the landmark measure will take place, opening up the possibility of the law being watered down.

Since being passed, higher sin taxes that raised the price of cigarettes and liquor in the country have helped the Aquino administration fill up state coffers, helping fund the government’s expensive infrastructure and social welfare programs.

In 2013 or the first full year of implementation of the sin tax law, the incremental increase in collections reached P51.2 billion. This refers to the money the government would not have been able to collect under the old tax regime. The target for incremental revenues for 2013 was

P34 billion.

This year, incremental revenues from sin taxes are expected to reach P44 billion—a conservative estimate, according to Budget Secretary Florencio Abad.

Abad made the case for higher sin taxes, noting that these additional revenues have allowed the state to expand health coverage for poor and indigent households.

For instance, the Department of Health’s (DOH) budget this year received a P30.5billion boost to bring its annual outlay to P90.5 billion—nearly tripling its budget from 2010 levels.

Citing a recent DOH survey, Abad also noted that higher prices have also led to a reduction in smoking among the young and the poor. The percentage of people in poor households that were self-confessed smokers in 2013 dropped to 25 percent from 38 percent. Smoking among young smokers, those between ages 18 and 24, was halved to 18 percent after the law’s passage.

He said the Aquino administration was committed to continue increasing healthcare coverage nationwide, partly to make the effects of higher sin taxes more pronounced.

Abad also called on civil society, which was instrumental in pushing for the law’s passage in 2012, to sustain efforts to ensure that these reforms are not unwound in 2016 during the measure’s mandatory review.

“The collaboration between civil society and the government, between civil society and politicians, medical professionals, international health advocates, that’s never happened on that scale until we did this (in 2012),” Abad said.

For her part, BIR’s Henares said the private sector would also be instrumental in protecting the sin tax law after President Aquino steps down from office.

“Without the help of civil society, the [fight for reforms] would still be going on,” she said.