THE Department of Finance (DOF) called on the 18th Congress to pass this year a measure that will increase taxes on alcohol products to at least P40 per liter and further raise taxes on heated tobacco and vapor products.
Finance Secretary Carlos G. Dominguez III said the new measure will help boost funds for the government’s Universal Health Care (UHC) program while curbing smoking, binge drinking and other vices, especially among the youth.
Dominguez noted that from 2020 to 2024, all current sources of government funding can cover UHC at around P200 billion annually.
The cost of the program will start at P257 billion in 2020 and increase by an average of around P11 billion to P12 billion a year. Funding will amount to a total of P1.44 trillion by 2024.
Without a substantial adjustment to the current “sin” taxes, the cumulative funding gap for the UHC will reach P426 billion by 2024. This is why raising excise taxes on tobacco products, Dominguez said, is a major step in ensuring that the UHC program is properly implemented.
“President Duterte’s goal is to implement the UHC program the way it was meant to be implemented: as a first-class law on a par with the world’s best health-care systems. It is meant to provide quality and affordable health care for all, especially for poor families,” he said in a statement.
“We can only accomplish this by raising the taxes on sin products. The revenues we will collect from the higher or new taxes on regular tobacco products and their alternatives will help fill the funding gap in the UHC program,” Dominguez added.
The DOF also said the new law that mandated higher taxes on cigarettes and the taxation of e-cigarettes and other alternative devices for smoking will enable the government to properly implement the UHC program.
While Republic Act (RA) 11346 which was signed by the President on July 25 is primarily a health measure meant to wean smokers from their addiction and discourage young Filipinos from taking up this vice, the new measure will also bankroll the UHC.
The finance chief said RA 11346 is in step with the President’s commitment in his fourth State of the Nation Address to lay the groundwork that “will ensure a secure and comfortable life for every law-abiding Filipino.”
The new law increases the excise tax on cigarettes from the current P35 per pack to P45 starting January 1 next year, followed by a P5 increase every year until the rate reaches P60 in 2023.
The rate will then be increased by 5 percent every year starting 2024.
It also imposes a new tax on electronic cigarettes (e-cigarettes) including heated tobacco and vapor (vaping) products, with a minimum P10 excise tax for 0-10 ml of liquid solution or gel starting January 1, 2020.
Every 10.01-20 ml is taxed P20; 20.01-30 ml, P30; 30.01-40 ml, P40; 40.01-50 ml, P50; and for more than 50 ml, P50 plus P10 for every additional 10 ml. Starting January 1, 2021, the rate will be increased by 5 percent every year.