Press Release – Action for Economic Reforms – 17 August 2012

On the heels of the first Senate Ways and Means Committee hearing on sin tax, Senator Frank Drilon reiterated his stance on the bill stating, “This is first and foremost a health measure. At the same time, its passage will generate significant revenue for the administration.”

Senator Drilon also dispelled claims that a steep increase in tax rates will give rise to revenue losses. He stressed, “Right now, both the government and society are incurring substantial economic costs due to the multiple diseases that arise from smoking and drinking.”

“The best approach is not through curative measures but preventive measures. In this case, by introducing steep tax rates,” continued Drilon. “We want to prevent vulnerable sectors from picking up this dangerous habit.”

The senator added that high taxes would effectively reduce the number of smokers and drinkers, particularly the young and the poor. He maintained, “This should be our main agenda when discussing this bill.”

Former health secretaries Dr. Alberto Romualdez and Dr. Esperanza Cabral echoed Drilon’s stance that the bill be primarily viewed as a health measure.

Both secretaries also voiced out their support for Senator Miriam Defensor-Santiago’s version of the bill or Senate Bill No. 3249, which is similar to HB 5727 with a few essential improvements.

Under her bill, SB 3249 contains the following reforms:
(a) Removal of the price classification freeze
(b) Unitary tax structure for all cigarette and alcohol products
(c) Significant tax rate increases
(d) Indexation to nominal gross domestic product (GDP) growth rate, as published by the National Statistical Coordination Board

In addition, the bill also mandates a periodic review every 5 years to achieve its health and revenue objectives. This would ensure compliance with the standards of the WHO Framework Convention on Tobacco Control (WHO-FCTC).

Santiago’s bill would also include adjustment measures to prevent job losses and provide assistance to displaced workers.

“While we recognize HB 5727, we believe that the essential features of Senator Santiago’s bill will more effectively curtail alcohol and cigarette consumption,” said Dr. Romualdez. “Furthermore, SB 3249 will provide higher revenues that will finance our long-overdue UHC program.”

“We appeal to Senator Ralph Recto to consider this bill as the Senate’s version,” stated Dr. Cabral. “At the end of the day, we want a bill that will, in effect, properly address our country’s dire health issues.”