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Singson’s Sin Tax Bill: Anti-Reform, Anti-Poor

In a rushed, madcap meeting of the National Internal Revenue subcommittee held at the House of Representatives on 30 January 2012, a substitute version of the sin tax bill was signed and approved by 10 legislators, led by the subcommittee’s chair, Representative (Rep.) Eric Singson Jr. of Ilocos Sur.

The substitute bill consolidates the salient facets of the bills previously filed by Rep. Hermilando Mandanas and Rep. Singson on the excise tax for alcohol and tobacco merchandise. Sin tax reform advocates have criticized the Mandanas and Singson bills for their weak provisions such as the absence of inflation indexation and the retention of multi-tiered tax rates.

Anti-Reformers attempt to sabotage the administration’s sin tax bill

In a rushed, madcap meeting of the National Internal Revenue Subcommittee held at the House of Representatives on 30 January 2012, a consolidated version of the Sin Tax Bill was signed and approved by 10 members of the House, led by the Subcommittee’s chair Rep. Eric Singson Jr. of Ilocos Sur.

The ten signing Congresspersons including Rep. Singson, Rep. Mitos Magsaysay of Zambales and Rufus Rodriguez of Cagayan de Oro City want a bill that undermines the tobacco and alcohol tax reforms.

An Appeal to Representative Mandanas

As the 15th Philippine Congress resumes its regular session on 14 November 2011, we look forward to seeing the Lower House immediately tackle the passage of a bill that will reform tobacco and alcohol taxes. After all, no less than the President, with the concurrence of the House Speaker, has pronounced the bill on sin taxes— we prefer to call them health-oriented taxes— as a priority legislative measure.

In fact, the Legislative Executive Development Advisory Council (LEDAC) has endorsed a bill that contains the best features found in the bills filed by several House representatives, namely Henedina Abad, George Arnaiz, Jocelyn Limkaichong, Pryde Henry Teves, and Niel Tupas, Jr.

Abad: Indexation of Sin Taxes Still an Aquino Priority Measure; P33-billion Projected Revenue for Indigent Healthcare Insurance

“The Aquino administration continues to support the indexation of sin taxes on tobacco and alcohol to inflation as a key reform measure. It is expected to generate about P60 billion, of which about P33 billion that we can use for social services for the poor, particularly universal healthcare for the second quintile of poor households,” he said, noting that the first quintile is already being fully assisted starting with the 2012 National Budget.

Higher Sin Tax: Bigger Revenues, Less Consumption

All told, the total cumulative revenues to be generated from the sin tax reform will amount to more than PHP530 billion pesos in six years (2012-16). For the first year alone, the revenues to be collected will reach PHP 60.63 billion pesos, half of the amount to be contributed by the tobacco taxes.

Furthermore, health objectives will be satisfied. We can expect a reduction of approximately two percentage points in smoking prevalence, and we can generate substantial funds to finance the government’s program for universal health coverage.

The ghost conquistador and the specter of smuggling

Recently, the Philippine Daily Inquirer’s editorial titled Taxing vices (27 August 2011) made this conclusion: “So whether it is to raise taxes or curb vices, this is one piece of legislation that merits serious consideration by Congress. And the time to enact it is now during the current session, when our lawmakers are still not too preoccupied with ensuring their reelection.”

A week earlier (19 August 2011), Inquirer columnist Raul Pangalangan explained through his essay the essential features of the sin tax reform, namely the indexation of the specific tax to inflation, the adoption of a simplified unitary tax, and the removal of the discriminatory price freeze classification for certain tobacco products, where tax rates are pegged at 1996 prices. The Inquirer editorial cited above also discussed these attributes. Professor Pangalangan extends his work to tackle the “legal sophistication of the tobacco industry.”

The Pangalangan piece was an effective one, if we go by Mao’s statement that to be attacked by the enemy is a good thing. Someone rejoined, through a letter to the editor, which the Inquirer published.