Press Release— Action for Economic Reforms— 15 January 2014

With record excise tax collections sparked by the passage of the Sin Tax Law, universal healthcare is now within reach for all Filipinos.

As the second year of implementation of the Sin Tax Law comes into effect, civil society advocates are expecting even greater health dividends to materialize in 2014. The landmark tax reforms have ushered a ‘game-change’ for the Philippines’ universal healthcare effort, with the single largest budget increase ever for the DOH— a 57.9 percent expansion of its P53-billion 2013 budget.

“One year since the enactment of R.A. 10351, the Sin Tax Law is clearly on the right track towards attaining its health and revenue objectives,” said Jo-ann Latuja, senior economist of Action for Economic Reforms (AER). “Excise tax collections have hit record highs, and there are numerous indications that the law is gradually making a dent on levels of cigarette consumption.”

From January to November 2013, the Bureau of Internal Revenue collected P91.6-billion from excise taxes on tobacco and alcohol products, with P41.1-billion in incremental revenues.

Similarly, according to a November 2013 rapid tobacco survey by DOH and AER, cigarette consumption among 304 Cotabato smokers declined by 24 sticks on average.

“This 2014, Filipinos will be able to reap even greater health benefits from the law, through vastly increased public health spending by the DOH. It will be our country’s poor, most of all, who will gain from this,” Latuja shared.

Indeed, in a statement delivered to an AER press conference last December 20, DOH Secretary Enrique Ona lauded the first year of implementation of R.A. 10351 for bringing about the “biggest budget increase” in the history of the department.

In the 2014 General Appropriations Act, public resources allocated to DOH now stand at P83.7-billion— the fifth largest departmental budget allocation this year.

“The sin tax law has greatly enhanced excise tax collections, which would translate to a significant increase in funding for our health programs,” said Ona’s statement, as read by DOH Undersecretary Ted Herbosa. “This will ensure financial sustainability of our program of universal healthcare for all of the years to come, and finally seal the financial gap that has kept us from giving our people the kind of healthcare that we aspire for and dream of.”

According to Ona, the incremental revenues received by DOH from the Sin Tax Law would be used to (1) fund Philhealth premiums for the poor and non-poor, (2) fund the upgrading of government hospitals and health facilities, (3) expand public health programs such as immunization, and (4) hire health workers to support the implementation of the universal healthcare program.

Notably, within the overall DOH budget for this year, the largest increases for health spending were for the non-communicable disease prevention and control program (a 729 percent increase to P586-million) and for health insurance subsidies for the poor (a 179 percent increase to P35.3-billion).

The P35.3-billion budget for Philhealth premiums, asserted Ona, would be enough to meet the health insurance needs of the 14.7 million poorest families in the Philippines.

“The milestone DOH budget in the 2014 GAA is yet another huge victory for health that has been secured by the Sin Tax Law,” said Latuja. “With these public resources assured for health, universal health is no longer just a dream, but a real possibility for our fellow Filipinos.”

“We at AER are now looking forward to working with government in making universal healthcare a reality for all Filipinos in 2014 and the years to come,” she added.