Press release – Action for Economic Reforms – 9 November 2012

Civil society and health advocates stood behind Acting Ways and Means Chair Senator Frank Drilon’s substitute bill for sin tax.

“We strongly support the measure that Senator Drilon has crafted,” stated Filomeno Sta. Ana III, coordinator of Action for Economic Reforms. “It contains the essential reforms, especially the life-saving measures that are found in the other good bills, like the Miriam Santiago bill and the Lacson Bill. It is likewise a significant improvement of the amended Abaya bill.

Drilon’s version, which he presented on Monday, had similarities to the Lower House version of the bill but Sta. Ana pointed out that it also “adopted features of Senator Miriam Defensor-Santiago’s bill.”

Sta. Ana stressed, “Of course we can still push for some improvements. For example, higher indexed tax rates based on nominal Gross Domestic Product (GDP) per capita growth. An indexation to nominal GDP ensures that the rates keep up with inflation and increases in income to prevent alcohol and cigarettes from being more affordable over time.”

Other amendments can include a movement towards a unitary tax rate for beer, safety nets for workers and a review mechanism to ensure that the sin tax rates will continue serving health and revenue objectives and will be in compliance with international commitments, such as the Framework Convention on Tobacco Control.

Drilon’s amendments for cigarettes include a reduction to 2 tiers, P12 for low-priced and P28.30 for medium and high-priced brands. Tax rates would be unitary at P32 by 2016 with a subsequent 5% increase every year effective January 2017.

Amendments for distilled spirits include a combination of P30 and 30% of the net retail price (NRP) by 2013. Fermented liquor would be classified into 2 tiers based on different NRPs.