Sin Tax Coalition Statement on Bill Raising Luxury Taxes (House Bill 6993)
The Sin Tax Coalition commends House of Representatives Ways and Means Chair Rep. Joey Salceda for filing House Bill 6993 increasing tax rates on non-essential goods. These goods include high-end bags, jewelry, perfume, yachts, luxury cars, and wristwatches.
Increasing the tax rates of what Rep. Salceda has termed “non-essential goods” to 25 or 30 percent will generate P15.5 to P18.6 billion in revenues. Luxury taxes aim to tax wealthy individuals and hence are progressive taxes.
While we laud Rep. Salceda for pursuing the luxury tax reform, we also urge him to increase the taxes on other non-essential products.
Alcohol, for example, is a non-essential and harmful product that should be taxed higher. Here, Rep. Salceda has filed a bill raising tax rates on alcopops or pre-mixed alcoholic beverages, House Bill (HB) 5532. This is a good bill, and we hope Congress will broaden the scope of alcohol products that will be subjected to higher tax.
We must tax alcohol higher to protect Filipinos from its harms, ranging from the increased risk for non-communicable diseases (NCDs) like heart disease and cancer to domestic violence and road accidents. The World Health Organization (WHO) recently stated that there is no “safe” level of alcohol consumption.
Our community of health advocates is hopeful that Rep. Salceda and the House Committee on Ways and Means will soon hold a committee hearing for HB 5532. His bill aims to protect the youth from the harms brought about by the consumption of alcopops or pre-mixed alcoholic beverages.
We urge Rep. Salceda to consider a menu of other health taxes to improve our health outcomes.
We note for example that Rep. Salceda has filed a bill to increase taxes on e-cigarettes and vape products. These are of course non-essential goods. Worse, despite the claim of the tobacco industry that electronic nicotine and non-nicotine device systems are less harmful than cigarettes, indisputably, they still cause harm.
According to Adam Smith, “sugar, rum, and tobacco are nowhere necessities of life, which [have] become objects of almost universal competition, and which are therefore extremely proper subjects of taxation.” Thus, Rep. Salceda is following Smith and his classical economics in pursuing the taxation of goods that are “nowhere necessities of life.”
Ultimately, the health taxes will not only raise revenues, especially for the government’s health, food, and nutrition programs, but also deter Filipinos from consuming harmful, non-essential products. These health taxes should likewise be supplemented by other measures like providing food subsidies to the poor and enabling the poor to have access to cheap or affordable food.