DOF: Allow ‘sin’ tax law to run its course

Finance Secretary Carlos G. Dominguez III INQUIRER FILE PHOTO

Finance Secretary Carlos G. Dominguez III urged lawmakers on Wednesday to allow the full implementation of the Sin Tax Reform Law amid moves to stop the mandated unitary excise tax system for cigarettes.

“We consider the Sin Tax Law or [Republic Act No.] 10351 to be a very good law. Our position is to fully implement the law and let it run its course, including Section 11, which states that starting the third quarter of calendar year 2016, the congressional oversight committee is mandated to review the impact of the tax rates provided under this act,’” Dominguez said in a statement.

In a text message last week, Senator Juan Edgardo “Sonny” Angara told the Inquirer the review of the law is currently ongoing. Several agencies have yet to submit reports on the law’s impact, said Angara, who chairs the congressional oversight committee on comprehensive tax reform and the Senate ways and means committee.

The Department of Finance (DOF) was looking at hiking to P40 per pack the excise tax to be slapped on cigarettes in 2018 under a unitary system.

If RA 10351 is to be followed, a unitary excise tax of P30 per pack should be implemented next year. This would then go up to P31.2 per pack the following year.

Finance Undersecretary Bayani Agabin said “the figures on the unitary sin tax system that is supposed to be adopted beginning next year as mandated by law are still very preliminary numbers,” adding that the DOF was still studying the ideal price points while considering products’ price elasticities and the intended effects of the law on health.

The implementation of a unitary rate starting 2017 was mandated under the law to follow the current two-tiered system, which imposes a P25 tax for cigarettes priced at P11.50 per pack and a P29 tax for packs priced higher.

House Bill No. 4144, aimed at amending the law and retaining the two-tiered excise system for cigarettes beyond 2016, was approved on second reading by the House of Representatives last Wednesday.

HB 4144, authored by ABS  Rep. Eugene Michael B. de Vera, was said to have been lobbied by homegrown cigarette manufacturer Mighty Corp., which makes cheap cigarettes.

Industry and government sources claimed the bill was railroaded. It was filed only on Oct. 19 and has undergone only two hearings at the committee level, the first of which was last Nov. 28. After it was approved by the House ways and means committee without amendment on Dec. 5, HB 4144 was already tackled at the plenary the next day.

Health groups lambasted House members belonging to the so-called “Northern Luzon alliance” for railroading the bill to allegedly protect the tobacco industry’s interests.