DOF: ‘Sin’ tax law ain’t broke

Finance Secretary Carlos G. Dominguez III insisted the existing Sin Tax Reform Law must first undergo a review before the government could decide on the need for a tweaking.

Still, Dominguez said Republic Act 10351 is already a “pretty good” law. “I’ve always worked on the principle of: If it ain’t broke, don’t fix it.”

“The current law requires that there’s an oversight committee that sets the numbers, deliberate on it and decide on what to do in 2018,” the Finance chief told reporters.

He said the current sin tax legislation augured well with President Duterte’s intention of reducing the number of smokers in the country, a project that the latter first started when he was still mayor of Davao City through various ordinances banning smoking in public.

Dominguez said the President was aware of the progress of House Bill No. 4144, aimed at keeping the two-tiered excise tax structure in 2017 instead of the single rate mandated under the law.

While Dominguez said he could not say what Mr. Duterte’s stand was on the excise tax issue, the President was adamant on the effects of the law on smokers.

“The goal of this sin tax is not to raise revenues; it’s to stop smoking. It’s a health measure—that’s the whole point. What did the President do as mayor in Davao City? So you can assume what his general tendency would be—he doesn’t like smoking,” Dominguez said.

HB 4144 authored by ABS Partylist Rep. Eugene Michael B. de Vera was passed by the House on Representatives on third and final reading before Congress went on Christmas break.

Sen. Juan Edgardo “Sonny” Angara said the Senate ways and means committee, which he chairs, had already received a copy of HB 4144, hence can tackle the measure early next year.

Since there was no new law yet, Dominguez said the unitary rate structure would be implemented on Jan. 1, 2017, as scheduled.

Even if HB 4144 became a law, Dominguez said tax authorities would have a hard time in the implementation process since it would entail changing rules midstream.

“It will go into unitary by law. So what do they want us to do? Go back to dual again in the middle of the stream? We have to discuss that because the tax administration is quite difficult.”

HB 4144 proposed that the two-tiered system already in effect should be maintained. It also suggested to increase the excise tax rate to P32 for cigarette packs priced P11.50 and below, and P36 for packs priced higher. The bill also proposed an annual 5-percent increase in the excise tax beginning 2018.

Under the current law, tobacco products will finally be slapped a unitary rate of P30 per pack starting Jan. 1, 2017. Cigarettes priced P11.50 per pack are currently being taxed P25 while those priced higher are slapped P29 per pack.

In a recent joint statement, local and foreign business chambers said they were backing the DOF’s push for the full implementation of the sin tax law, which was passed in 2012.

“We believe that RA 10351 was carefully and properly designed to meet the desired national targets and has undergone proper consultations and thorough deliberations with key stakeholders. It is a good and sufficient law that would lead the government to attain its health and revenue goals,” the business groups said.

The Philippine unit of multinational tobacco firm British American Tobacco as well as PMFTC Inc., tycoon Lucio Tan’s joint venture with global cigarette giant Philip Morris, had also expressed support to the DOF position.

Industry and government sources earlier claimed that HB 4144, which was backed by homegrown low-priced cigarette manufacturer Mighty Corp., was railroaded.

HB 4144 was filed only on Oct. 19 and had undergone only two hearings at the committee level, the first one last Nov. 28.

It was then approved by the House ways and means committee without amendment on Dec. 5. HB 4144 was subsequently tackled at the plenary the next day.