Malacañang pushes ‘sin tax’ changes

A vendor sells cigarettes at a supermarket in Quezon City on July 5, 2011. A proposed bill restructuring the excise tax on tobacco and alcohol products is seen to generate some P60 billion, according to President Benigno Aquino III. AFP PHOTO / JAY DIRECTO

The government aims to generate P60 billion from a proposed bill restructuring the excise tax on alcohol and tobacco products.

President Aquino said the revenues from the modified excise tax would be earmarked for universal healthcare. He added that its ultimate goal was to reduce the consumption of alcohol and tobacco.

The restructuring of the sin taxes was one of the 13 measures that President Aquino presented to congressional leaders as his administration’s priority pieces of legislation.

“If I remember correctly, and please don’t hold me to this, vaguely, it should be about P60 billion,” President Aquino said when asked how much the administration expects to generate if Congress passes the restructuring of the excise tax on alcohol and tobacco.

“Of course, sin products are elastic. Price determines volumes, volumes determine revenues, so there are certain assumptions that we validate, various figures to be presented depending on the assumptions,” Aquino explained in a news conference following the Legislative-Executive Development Advisory Council (Ledac) meeting in Malacañang.

According to Malacañang, the bill aims to unify excise tax rates over three years.

It allows the automatic adjustment of the tax rates using the relevant NSO-established tobacco and alcohol indexes, which will track inflation and, thus, maintain the buoyancy of the revenues from this source since the authority to increase the rates expired on Jan. 1, 2011.

The proposed law directs specified portions of the incremental revenues to be earned from the excise tax toward programs for promoting economically viable alternatives for tobacco farmers and workers and augment the funds for the universal health care program of the government.

“Any increase in revenue does help our situation,” the President said.

Asked if he would rather that Congress pass the tax measure soon because of the expected effects of the economic developments in the United States and in Europe, President Aquino indicated it would be up to Congress.

“We proposed all of these measures because we really believe that they are needed to run this country better. I’m sure that in the conscientious fulfillment of their duties and obligations, they will expedite the passage of measures that they already agree with,” President Aquino said. “With the sin taxes, there’s no question about our ultimate aim, to decrease the consumption of sin products.”