Among the more popular legislations passed under the administration of President Duterte is Republic Act 11223, or the Universal Health Care Law.
To be funded mostly by the additional taxes on cigarette and liquor,the law will automatically enroll every Filipino in the National Health Insurance Program.
Thus, even as cigarette and liquor products have already been slapped with additional taxes based on the first tax-reform package of the Tax Reform for Acceleration and Inclusion or the TRAIN law that would raise tobacco tax to P60 per pack from P30, and the annual excise tax to 9 percent from 4 percent, while alcohol would be raised to P40 per liter, other bills raising tobacco and alcohol taxes have been pending in the Senate since 2017.
Meanwhile, the House of Representatives passed a bill raising cigarette tax and a separate bill increasing tax on alcohol in 2018.
Driven by the goal to raise around P257 billion to fund the first-year implementation of the Universal Health Care Law, increasing tobacco tax to P90 per pack, which would be three times more than its current level, is seen by our legislators as a rich source of funds for the country’s universal health-care program.
Based on the new schedule for “sin” taxes, duty on tobacco products will be raised further to P37.50 from January 2020 to December 31, 2021, and to P40 from January 1, 2022, to December 31, 2023. From January 1, 2024, the levy will be raised by 4 percent annually.
I am concerned though on how easy it is for our legislators to amend certain provisions of the sin tax law, even if the full impact of such original provisions have yet to be attained. If we liken the legislative exercise to a basketball game, it is like changing pivot during mid-game.
This is definitely not a good play for affected industry stakeholders. It is bad in the sense that, while affected industry stakehokders are still coping with the additional taxes imposed under the orignal version of the sin tax law, they would have to readjust their focus again, if only to meet the amended tax provisions of the TRAIN law.
As the famous American surgeon William Frederick Brook once said, “Learn to adjust yourself to the conditions you have to endure, but make a point of trying to alter or correct conditions so that they are most favorable to you.”
While industry stakeholders affected by the second tranche of the TRAIN law cannot do anything but comply with the new taxes provided by the law, some of them may, however, be extending the tax absorpotion limit to the max. But nonetheless, they would have to make certain adjustments to their operations, if only to keep their company operationally viable.
After all, there is such a thing as “tipping point” where a series of small changes or incidents become significant enough to cause a larger, more important change.
I support the Universal Health Care Law. But at least, what our legislators could have done was to spread the source of funds for its implementation to other dutiable products, as well. Distilled spirits are not entirely bad, when taken with moderation. It is when taken excessivley that makes distilled spirits bad.
I hope that with the implementation of the second tranche of the TRAIN law over the next four years already defined, Congress would no longer dabble with the law and amend it further to suit evolving developments in the country’s economy.
As the famous African-American sprinter Wilma Rudolph also once said, “Winning is great, sure, but if you are really going to do something in life, the secret is learning how to lose. Nobody goes undefeated all the time. If you can pick up after a crushing defeat, and go on to win again, you are going to be a champion someday.”
Stakeholders in the country’s cigarette and distilled spirits industry, with their contributions to the nation’s economy, the jobs for workers and the products they offer to consumers are definitely champions in their own respective ways. And sticking to the original play on the sin tax law would be most beneficial to the government, industry stakeholders and the Filipinos.
Meanwhile, let me reiterate my statement about sin tax during the Senate hearing when I said: “If people would benefit from the revenues generated by the sin tax on tobacco and alcohol, will it not also make them sinners?”