World Bank: PH needs more pro-poor policies like ‘sin’ tax law

The World Bank is urging the Philippine government to introduce measures similar to the Sin Tax Reform Law to foster inclusive growth.

In a report titled “Sin Tax Reform in the Philippines: Transforming Public Finance, Health, and Governance for More Inclusive Development,” the multilateral lender said, “if the Philippines is to realize its ambition of inclusive growth, the Sin Tax Law will need to be followed by other reforms, both big and small, that embody the principles of good governance and pro-poor social policy that the Sin Tax Law stands for.”

It said the government must be commended for introducing a framework that could easily be copied by other countries.

“The Sin Tax Law showed it is possible to escape a low-level equilibrium clouded by patronage and personalism to pursue goals whose benefits are more broadly shared, are based on clear principles, and are informed by evidence. Reform champions across a host of other policy domains will hopefully draw inspiration from the Sin Tax Law experience,” it said.

On the fiscal side, the World Bank noted the law “has continued to yield increasing revenues, particularly from cigarettes,” even as “an absolute decline in removals, especially for lower-tier cigarettes, was dampened during the first years of the reform as not all price increases were passed to consumers.”

Data from the Bureau of Internal Revenue (BIR) showed that by the end of April, excise taxes collected from the “sin” products jumped 16.5 percent year-on-year to P35.5 billion. The total exceeded by almost 9 percent the P32.6-billion goal for the four-month period.

A DOF report also showed that as of October last year, total incremental revenues from the reform law reached P149.5 billion, “pouring an unprecedented amount of resources to the government’s universal healthcare program.”  Ben O. de Vera