THE Department of Finance (DOF) confirmed on Thursday that President Duterte has signed into law the measure further increasing the excise tax rate slapped on tobacco products.
In a text message to reporters, Finance Secretary Carlos G. Dominguez III said, “Sin tax RA 11346 signed July 25.”
RA 11346 is entitled: “An Act increasing the excise tax on tobacco products, imposing excise tax on heated tobacco products and vapor products, increasing the penalties for violations of provisions on articles subject to excise tax, and earmarking a portion of the total excise tax collections from sugar-sweetened beverages, alcohol, tobacco, heated tobacco and vapor products for universal health care, amending for this purpose sections 144, 145, 146, 147, 152, 164, 260, 262, 263, 265, 288 and 289, repealing section 288 (B) and 288 (C), and creating new sections 263-A, 265-B, and 288-A of the National Internal Revenue Code of 1997, as amended by RA 10963, and for other purposes.”
This signing of the measure was also confirmed by Executive Secretary Salvador C. Medialdea, saying that the signed bill aims to address the urgent need to protect the right to health of the Filipino people.
“To address the urgent need to protect the right to health of the Filipino people and to maintain a broader fiscal space to support the implementation of the Universal Health Care (UHC) Act, the President has signed into law House Bill (HB) 8677 and Senate Bill (SB) 2233 Increasing the Excise Tax on Tobacco Products,” Medialdea said.
Earlier, SB 2233 was approved unanimously by senators on third and final reading, providing for a unitary P45 excise tax increase per pack of tobacco products in 2020; followed by a series of P5 hikes until the rate reaches P60 in 2023, and a 5-percent annual increase thereafter.
The House of Representatives concurred in the Senate version after senators reconsidered their earlier final-reading approval of the bill to address the concerns raised by congressional representatives from the tobacco-producing provinces of Northern Luzon.
Funding for UHC
The DOF said Congress’s phased increase is acceptable and will secure the necessary funding for the UHC program.
The bill submitted to the President for his signature also introduces taxation on electronic cigarettes (e-cigarettes), such as vapor and heated tobacco products, which are now becoming increasingly popular among the youth, with the approved measure imposing a P10 tax for every 10 milliliters of vaping liquid.
The unitary excise tax rate on tobacco products was earlier increased under the Tax Reform for Acceleration and Inclusion (TRAIN) law from P30 per pack of cigarettes to P32.50 beginning January 1, 2018 and to P35.00 beginning July 1, 2018.
Earlier, the finance chief said that from 2020 to 2024, all current sources of government funding can cover UHC at around P200 billion annually, while the cost of the program will start at P257 billion in 2020 and grow at an average of around P11 billion to P12 billion per year, amounting to a five-year total of around P1.44 trillion by 2024.
Without substantially adjusting the current sin tax rates, Dominguez said the cumulative funding gap by 2024 will reach P426 billion.