P40 billion is good, P60 billion is better – sin tax advocates

Press release – Action for Economic Reforms – 18 October 2012

Advocates for reform of the sin tax bill said on Thursday that the P40 billion target for a new sin tax bill to be crafted is good. But the P60 billion is better.

Filomeno Sta. Ana of the Action for Economic Reforms (AER) said other versions of the bill with a target of P60 billion in revenues were formulated to respond to both increasing revenues and curbing consumption of alcohol and cigarettes.

“The target of P40 billion is good. But P60 billion is better since it meets both revenue and decreasing consumption targets,” Sta. Ana said.

AER senior economist Jo-Ann Latuja said the difference of P20 billion could be used productively.

“P40 billion will cover universal health care needs. But we would need more to fund safety net programs for farmers and workers. We hope Sen. Franklin Drilon will consider raising the target,” Latuja said.

She explained that the revenue target should not be the only consideration in crafting a new sin tax bill. Latuja said other important reforms related to the bill that should be adopted are the single-tier tax system, annual increases based on nominal GDP growth and a significant tax increase.

“These three factors will help achieve the health objective of reducing consumption of these products and protecting the young and the poor from smoking and excessive drinking,” she said.

Sen. Ralph Recto, former chair of the Senate Ways and Means Committee who resigned his post after his version of the sin tax bill was criticized, has refused to let the committee use his version in coming up with a new bill.

Sens. Francis Pangilinan and Drilon, who is acting chair of the Ways and Means Committee, had said they can still use Recto’s version and work towards amendments.

Palace executives said they are amenable to a P40 billion revenue target.

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