Senate reapproves tobacco excise tax hike bill

Updated @ 1:24 a.m., June 5, 2019, to add more details

MANILA, Philippines — With 21 affirmative votes and no negative votes, the Senate on Tuesday again approved on third and final reading the measure that seeks to raise the excise tax on tobacco products.

The Senate reconsidered its earlier third and final approval of Senate Bill No. 2233 after some members of the House of Representatives expressed opposition to the revenue-sharing plan under upper chamber’s version of the measure.

READ: Senate OKs tobacco tax hike on 3rd and final reading

READ: Senate to reconsider approval of tobacco tax hike bill

“Medyo umalma yung House, especially the representatives of the tobacco-producing provinces. They preferred to stick to the old formula,” Senator Sonny Angara, sponsor of the bill, told reporters in an interview when asked why the bill was amended.

Under the prevailing Republic Act 7171, local government units (LGUs) that produce Virginia-type cigarettes would receive a 15-percent share of the total tax collection and allocate it for their projects.

Currently, 70 percent of the 15 percent share is distributed to towns and municipalities while 30 percent goes to provinces, Angara said.

Angara said lawmakers from northern Luzon objected to the proposal to make the distribution of the share to 50 percent for towns and municipalities, and 50 percent for provinces.

However, the senator said the House agreed to retain the capping of revenues to P17 billion or 15 percent of the shares.

“Although pumayag sila doon sa capping, it’s either 15 percent or P17 billion,” Angara noted.

In effect, the earlier amendment, which was initiated by the Department of Finance (DOF) was “withdrawn,” according to Angara.

Since the measure was again approved by the Senate, it would again be transmitted to the House for its consideration.

Angara expressed hope, however, that the House would opt to just adopt the Senate version of the proposal.

“Umaasa tayo doon sa representation nila [House] na okay na sila doon,” the senator said.

“Pinapadala na natin and hopefully they will adopt the Senate version and there’s no need for a bicameral conference committee meeting,” he added.

If the House would adopt the Senate version, the proposed measure would skip deliberations at the bicameral conference committee and be transmitted to President Rodrigo Duterte for his signature.

The bill proposes a staggered excise tax hike for every cigarette pack from P45 to P60 for the next four years.

Once enacted into law, the excise tax on a cigarette pack will be P45 in 2020, P50 in 2021, P55 in 2022, and P60 in 2023.

The rate will automatically increase by 5 percent annually thereafter.

An excise tax of P10 per pack of 20 sticks will be imposed on heated tobacco products, while vapor products will have a P10 excise tax for every 10 milliliters. These rates will also increase by 5 percent annually starting Jan. 2023.

With the approval of the bill, Angara said the government would be in a better position to fill the massive funding gap for the universal health care program.

“We have come one step closer to giving the government more elbow room to plug the funding gap for the Universal Health Care (UHC) program that aims to provide all Filipinos with affordable and quality health care,” Angara said.

The measure also aims to reduce smoking among Filipinos, as a much higher tobacco excise tax would help reduce deaths and disabilities due to smoking.

READ: Senate OKs tobacco tax hike on 3rd and final reading

(Editor: Katherine G. Adraneda)