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Unforgiveable Sin Tax Version

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Sin tax is a tax levied on goods that are neither luxuries nor necessities, and in general considered to be harmful to society. The most common of these goods are alcohol and tobacco. Sin tax is usually imposed to generate additional revenue for the government, and to discourage and reduce the consumption of these harmful products, protecting public health and saving lives.


The country’s cigarettes and alcoholic drinks are among the cheapest in the world! Cigarettes, for example, have become cheaper relative to basic commodities such as food, education, and health in the past 10 years. The current multi-tiered tax system puts the youth and the poor in a trap by the ills of smoking and drinking as it encourages them to shift from higher-priced to lower-priced brands.


President Benigno S. Aquino III classified urgent a bill that would enact a new excise tax law that would be compliant with the global standards.


At the House of Representatives, there were at least 12 measures seeking to restructure the excise tax on alcohol and tobacco products, but the one being supported by the Aquino administration is House Bill (HB) No. 5727, penned by then Cavite Representative Joseph Emilio Abaya, the chair of the House committee on appropriations. Abaya is now the secretary of the Department of Transportation and Communication.


The original Abaya bill moved for a unitary tax instead of a multi-tiered system, indexed taxes to inflation, and dedicated taxes to universal health care and alternative livelihood for tobacco farmers. This bill sought to raise P60 billion (P30 billion each from tobacco and alcohol products.) But what the House of Representatives approved on the last day of its second regular session in June was the compromised version of HB 5727. This means it would only generate P31 billion (P27 billion from tobacco and only P4 billion from alcohol) in revenues, practically half of what was originally sought. According to economist Solita Monsod, this compromise was made possible to get the crucial votes of the National People’s Coalition who has affiliation with the San Miguel Corporation.


Then, it was the Senate's turn to deliberate on the Sin Tax. The Senate ways and means committee headed then by Senator Ralph Recto, insisted that the proposed legislation was a revenue and not a health measure. During the committee hearings, Recto kept on saying that he would strive “to come up with a tax structure that would benefit all players equally.” In October, when the committee report was released, Recto's version turned out to generate only a measly amount of P15 billion.


Health advocates have dubbed it as the “Recto-Morris” report because it basically adopted the proposal of tobacco giant Philip Morris-Fortune Tobacco. They added that the report not only “watered down” the sin-tax bill, but “drowned it." After getting these heavy criticisms, Recto resigned as chairman of the Senate ways and means committee. He then said that he does not want his colleagues to use his committee report, saying it is his intellectual property. Recto also attacked civil society groups that received funding from New York Mayor Michael Bloomberg to fight the powerful tobacco lobby. Health advocates retaliated by saying the senator should not go after groups that promote public health and help save the lives of millions of Filipinos. They reminded legislators that their mandate was to protect the people, particularly their health, and not business interests of the tobacco industry.


On the other hand, Senator Miriam Defensor-Santiago urged the Senate to adopt her version of the sin tax measure and use it as the basis for plenary debates. She said that under her bill, 85 percent of the P60 billion would be used for the government health program while the remaining 15 percent would be used for safety nets that would ensure that tobacco farmers can shift to alternative crops like vegetables that have a bigger market than tobacco. She said that health advocates have thrown their support behind her Sin Tax measure.


On November 6, Senator Franklin Drilon took Recto's place as committee chairman, said in his sponsorship speech said he intends to to generate at least P40 billion to P45 billion revenue from the Sin Tax. President Aquino who was in Vientiane, Lao People’s Democratic Republic attending the 9th Asia Europe Meeting at that time said, “At 40, we’re happy. At 60, we’ll be happier." He added, “But 40 is already, I think, sufficient to meet the objectives both in terms of gaining more resources and managing the deficit, but most importantly addressing the health issues."


The Sin Tax supporters, meanwhile, remained vigilant on the events that will transpire on this piece of legislation because they know that the powerful tobacco industry will surely put up a good fight.