The Market Monitor Minding the Nation's Business
By Luis Leoncio
Government collections from the excise tax on “sin” products, such as cigarettes and alcohol, in November 2015 increased by 39.58 percent to P16.298 billion, compared to those in the same period in 2014, according to the latest data of the Bureau of Internal Revenue (BIR).
The bulk of the excise tax collections in November was from cigarettes, which amounted to P12.585 billion, and which was 54.52 percent higher than that of a year ago.
Compared to last year, sin-tax collections from fermented liquors grew by 3.06 percent to P2.342 billion, distilled spirits and compounded liquors went up by 8.57 percent to P1.36 billion while wines surged by 64.97 percent to P11 million
For the January to November 2015 period, total excise tax on “sin” products reached P123.641 billion or 25.96 percent higher than that of the same period in 2014.
Excise tax from cigarettes for 11 months was pegged at P86.338 billion; fermented liquors at P25.246 billion; distilled spirits and compounded liquors at P12.029 billion; and wines at P28 million.
Advocates for the passage of the Sin Tax Reform Act of 2012 or Republic Act 10351, meanwhile, issued a warning against the possible reversal of the law in the upcoming 2016 review by the Congressional Oversight Committee.
Jo-Ann Diosana, a senior economist of the Action for Economic Reforms (AER), said groups that supported the passage of the landmark law must remain vigilant in guarding against any plan to amend it to promote the interest of the tobacco companies.
Section 11 of RA 10351 provides that starting the third quarter of calendar year 2016, the Congressional Oversight Committee created under Republic Act No. 8240 is “mandated to review the impact” of the tax rates.
“We cannot be complacent about it; we have to expect the worst because the tobacco industry was hurt when its market share went down. It is possible that after four years of implementation of RA 10351, industry leaders will create noise,” she said.
She said it was, therefore, important for the public to be observant of the lobbying strategies of opponents of the Sin Tax Law who may try to influence the results of the elections to favor legislators who will lead the efforts to reverse the law at the behest of tobacco firms.
She recalled the difficulties and challenges faced by the different groups that fought for the passage of the Sin-Tax Law against its opponents in the House of Representatives and the Senate before it was passed and signed into law by President Aquino in 2012.
The Sin Tax Law had resulted tax collections from tobacco and alcohol products to reach record highs. Total incremental revenues in 2013 amounted to P51.4 billion, surpassing projections of P34.1 billion for that year.
The state-run Philippine Health Insurance Corporation (PhilHealth) expressed satisfaction over the report that sin taxes collected in the first 10 months of this year have exceeded the government’s target.
PhilHealth President and CEO Alexander Padilla said he welcomed the positive development knowing it would hasten the attainment of the government’s goal of a 100-percent health-insurance coverage for Filipinos under its universal health coverage (UHC) agenda.
At present, there are about 15.7 million indigent or poor PhilHealth members and some 3 million elderly or senior citizens with dependents whose PhilHealth premiums are shouldered by the government through the revenues gained from the sin taxes.
These indigents, once admitted in hospitals, enjoy the “no-balance-billing policy” because the law ensures that since they belong to the impoverished category of the population, they cannot afford the high cost of their hospitalization or that of their family members.
Padilla noted that based on the Sin Tax Law, 80 percent of the incremental revenues from tobacco and alcohol products would be dedicated to the payment of premium contributions of indigents and elderly citizens.
The remaining balance of the revenues or 20 percent is dedicated to the health-facility enhancement program of the Department of Health (DOH).
The Sin Tax Law aims to increase taxes on all tobacco and alcohol products to provide additional budget for the government’s health programs and to keep so-called sin products, like cigarettes and liquor, beyond the reach of poor and young people, thus preventing them from getting addicted to such products.