Eunice P.

Lopez ABPL III

Argumentation Atty. Alvin BathanLandicho SIN TAX LAW IN THE PHILIPPINES

In this world, nothing can be said to be certain, except death and taxes. Benjamin Franklin My brother is a chain smoker. He started smoking at the age of 15. And I guess, he learned how to smoke because of the influence of his peers. Today, at the age of 27, he can consume almost 2 packs of cigarettes. My father is also a chain smoker and an alcohol drinkerbefore. He was able to minimize those habits because he is already suffering heart disease. The example I have given is only few of the million Filipinos who are into sinful habits. I am not indeed proud to say that my father and brother were one of them. Hence, I believe that the amended Sin Tax Law is positively a stepping stone towards a healthy andprogressivenation. What is Sin Tax? Sin tax is a tax levied on goods that are neither luxuries nor necessities, and in general considered to be harmful to society. The most common of these goods are alcohol and tobacco. Sin tax is usually imposed to generate additional revenue for the government, and to discourage and reduce the consumption of these harmful products, protecting public health and saving lives.In fact, we currently have a multi-tiered tax system in this aspect. However, such is still based on the 1996 retail prices of tobacco products keeping the cigarette prices of Big Tobacco at very low prices. According to the DOH (Department Of Health) the countrys cigarettes and alcoholic drinks are among the cheapest in the world.For cigarettes, a pack of the most popular foreign-brand costs on the average P27.72 in the Philippines, compared to P365.2 in Singapore, P146.08 in Malaysia, P104.84 in Thailand, and P64.68 in Indonesia. In addition, the Philippines is one of the

highest smoking prevalence among adults, and children aged 13-15 years old. Currently, 17.3 million Filipino adults are smoking: 47.7% of men and 9.0% of women. Smoking rates for women are also among the highest in Asia, second only to Japan and the Republic of Korea. As of 2007, 27.3 percent of children aged 13 to 15 are also smoking which is a 40 percent increase in youth smoking prevalence since 2003. Liquor has also been kept artificially cheap by low excise taxes and outdated classification. 50% of road accidents are due to drunk driving deaths. Alcohol consumption is estimated to cause from 20% to 50% of liver cirrhosis, epilepsy, poisonings, violence and several types of cancer. 2.5 million people die annually from harmful alcohol use; this comes to 4% of all deaths. With the alarming situations our nation is suffering, this urged the House of Representatives to pass a bill that will restructure the existing taxes imposed on alcohol and tobacco goods and such will be a great source of revenue that will help fund the Universal Health Care Program of the administration. It was Joseph Emilio Abaya, the chair of the House committee on appropriations, who is now the Secretary of the DOTC, who penned the House Bill No. 5727 or the Sin Tax Bill. Later on, the Senate passed a bill reconciling HB No. 5727 which is the Senate Bill No. 3299 or the Excise Tax on Alcohol and Tobacco Products. According to an article, the bill originally aims to collect P40 billion for the first year, during which additional taxes will be collected on a 60-40 basis: P24 billion from the cigarettes and P16 billion from liquor products. However, on December 11, after the ratification by the Senate of the final version of the bicameral conference committee report on the bill, the government is expected to generate P33.96 billion in additional revenues, in its first year of implementation in 2013: P23.4 billion from the increased taxes on tobacco and P10.56 billion from the taxes on fermented liquor and distilled spirits. It will be collected on a 69-31 basis. By 2015, the ratio will be 66-34; 65-35 by 2016; and 64-36 by 2017.

By January 1, 2013, distilled spirits will have a specific tax of P20.00 and an ad valorem tax equivalent to 15% of the net retail price (NRP) per proof liter, excluding the excise tax and the value added tax (VAT).But starting Jan. 1, 2015, the ad valorem tax will increase to 20% and by 2017, it will increase as the NRP increases. By Jan. 1, 2013, fermented liquors with a suggested net retail price of less than P50.60 will have a specific tax of P15.00 per liter; P17.00 by 2014; and P21.00 by 2016. Fermented liquors that have a NRP of more than P50.60 will be taxed P20.00 by 2013; P21.00 by 2014; and P23.00 by 2016. And by 2017, all beer, regardless of the suggested net retail price, will have a unitary tax of P23.50. For cigarettes packed by hand, the specific tax to be imposed, starting January 2013 would be P12.00 per pack; P15.00 by January 2014; P18.00 by 2015; and P21.00 by January 2016. By 2017, all cigarettes packed by hand will have a unitary tax of P30.00 per pack. Thereafter, a 4% increase of the P30.00 per pack rate will kick off by 2018. For cigarettes packed by machine, there is a cut off for packs priced at P11.50 below and P11.50 above. By 2013, cigarettes packed by machine with a price P11.50 below would have a specific tax of P12.00 per pack; P17.00 by 2014; P21.00 by 2015; and P25.00 by 2016; . Those priced above P11.50, by 2013, it will be taxed at P25.00 per pack; P27.00 by 2014 and 2015; and P29.00 by 2016. And on January 1, 2017, all cigarettes will have a unitary tax of P30 and there will be a 4% increase on January 1, 2018. Despite his resignation as the Chairman of Ways and Means Committee because of the media firestorm and protests by doctors on his proposed version of the bill which is nearly identical to one formulated by the tobacco industry but later on became part of the bicameral conference committee along with Sen.Bongbong Marcos, by this time, Sen. Rectos proposals were appreciated during the deliberations and amendments: (a) that more than half of the

revenue collected will be allocated for the Philippine Health Insurance Corp. (PhilHealth) so that an additional 10.4 million families could become members; (b) that there will be also fund allocated for the improvement of 618 district hospitals nationwide and for the upgrading of 16 regional hospitals and 22 medical centers throughout the country. Meanwhile, it is apparent that there areanti-Sin Tax Law. They have been driven by the misinformation of the would-be effects of the bill on the workers and tobacco farmers. But, according to the Sin Tax Law, farmers will get earmarked funds equivalent to 15% of the incremental revenues from tobacco taxes that will be devoted to safety nets and alternative livelihood projects. As to the prone smuggling issue, it was agreed that there will also be an earmarked fund which shall increase by 3% every year, for the tax administration program of the government as stated under Republic Act 8424. It is to combat the possibility of smuggling and give law enforcement agencies the capability to combat the latter. It has been a principle in Constitutional Law that Tax is the lifeblood of the state. But for us, the citizens, we consider it a Herculean task. I am always against tax increases knowing that in every single thing around me, tax is always incorporated. However, by this time, because of the Sin Tax Law, tax increase was indeed, never been a burden. Not a burden in the sense that higher tax will be imposed on goods which are neither luxuries nor necessities and are harmful to the society. Thats why they are considered sin products. I believe and I am not afraid to believe that such law will be a great help to every Filipino since it promotes the protection and security of the people in the aspect of public health.