NEDA backs higher ‘sin’ taxes

MANILA, Philippines – The country’s chief economist is backing moves to further jack up “sin” taxes slapped on cigarettes and alcoholic drinks to fund the universal health care program.

“Yes, Neda is supportive,” Socioeconomic Planning Secretary Ernesto M. Pernia, who heads the state planning agency National Economic and Development Authority, told reporters Wednesday when asked if he was supportive of the pending proposal of the Department of Finance (DOF) and Department of Health (DOH) to increase the excise taxes on sin products anew.

“I think sin taxes are good sources of revenues for the funding requirement of universal health care,” Pernia said.

The DOF and the DOH wanted to tax cigarettes by at least P60 per pack and alcoholic beverages by P40 per liter.

The DOH had estimated the first year of implementation of the universal health care program next year would cost P258 billion, but the government could allot only P195 billion minus the sin tax reform.

From 2020 to 2024, the funding requirement for universal health care would total P1.44 trillion, but the government could raise only P1 trillion if the excise taxes on alcohol and tobacco would be kept at present levels.

Even as cigarettes and alcoholic drinks get more expensive, Pernia does not see any big impact on overall consumer prices.

“Sin taxes haven’t been a major contributory factor to inflation—it’s really food and non-food” products, the Neda chief said. /g