Smuggling no reason to stop raising ‘sin’ taxes, says lawmaker

Minority leader Danilo Suarez. INQUIRER.net FILE PHOTO

MANILA, Philippines—Concerns about the entry of smugglers should not deter efforts to raise excise taxes on the so-called sin products, such as cigarettes and alcoholic beverages, according to lawmakers.

Minority Leader Danilo Suarez said lawmakers could consider increasing projected sin taxes gradually instead of going all-out for higher rates that would immediately P60 billion in additional revenues as some officials want.

Suarez on Wednesday threw his support behind the sin tax bill that the administration is pushing, and noted that this was the first time that the measure passed muster in the House in over 10 years.

The bill, he said, had been buffeted by strong opposition in the past from the powerful industries that it would effect.

According to him, the concerns that have been raised against this new push for the bill should not be enough to derail the effort.

Sen. Ralph Recto, who came out with a version of the bill that critics derided since it would  raise only about P15 billion in revenue,  warned that if the taxes were any higher, local manufacturers would soon cease to exist, and smugglers would come in to fill the void they leave. Senate President Juan Ponce Enrile said the same thing.

But Suarez said lawmakers should not be cowed by such claims.

“Why should that be our concern? That’s the duty of the Bureau of Customs, to stop smuggling. It’s as if you’re saying we can’t do anything about smuggling so we shouldn’t increase the taxes,” he said at a press briefing.

The bill’s main author in the House, Joseph Emilio Abaya, also said the smuggling concerns were not enough to deter the bill, considering the Philippines already has the lowest price of cigarettes in southeast Asia. It would also continue to have the one of the lowest prices even with the sin tax bill, he added.

“If smuggling occurs, smuggling will come from us going out rather than from out going in because we have low prices,” he said.

Meanwhile, Suarez  said lawmakers could resolve any tussle over the projected revenue from sin taxes by agreeing to increase these gradually.

“It can be a win-win situation,” he said.

He said that instead of going all-out for a P60 billion revenue in the first year lawmakers could agree to a projected revenue of P35 billion. The following year, they could increase this to P55 billion, and then to P60 billion the year after that.

Recto had said that raising excise taxes too high would push local tobacco and alcohol industry players to extinction. He said raising taxes would not automatically lead to higher revenues.