RA 11635 brings much-needed reprieve to private schools
Statement of Senator Pia S. Cayetano
Chair, Senate Ways and Means Committee
Principal sponsor, RA 11635
Private schools are the government’s partners in education. In this time of pandemic, they need as much assistance as they can get to continue delivering quality education to Filipino learners.
Thus, the enactment of Republic Act (RA) 11635 comes as a welcome development for them amid the uncertainties of the times, as rising COVID-19 cases forced us to restrict face-to-face classes to start the New Year.
This timely measure, which I sponsored, amends Section 27(B) of the National Internal Revenue Code, to clearly indicate that all proprietary educational institutions, whether for profit or non profit, shall enjoy the 10% preferential tax rate.
This shall also allow them to be covered by a provision under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which reduced the tax rate of such institutions from 10% to 1% starting July 1, 2020 to June 30, 2023.
With this measure, private schools would be given much-needed reprieve to cope with the continuing challenges caused by the pandemic, starting with their own financial viability and sustainability.
It must be emphasized that this law resulted from continuous dialogue and cooperation among the various stakeholders. We worked with the Bureau of Internal Revenue (BIR) and the private schools, led by the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA), to root out the issues and find a common solution.
We need to continue working with our partners in education for long-term solutions in terms of policy and budget, using strategic foresight and futures thinking to help this sector recover from the pandemic, and beyond.
This is part of our country’s commitment under Sustainable Development Goal No. 4, which is to ensure inclusive and equitable quality education for all by year 2030. #
Senate Ways and Means Committee Chairperson Pia S. Cayetano assured that the committee report for the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) will be fair to all sectors, including foreign investors and local business owners.
The Senator made this announcement during an interview with media members after the panel’s hearing on Wednesday (February 5).
“Basically, the flow will be the same, except that there are clearer parameters. There are clearer numbers, so that the industries can make their computations. They can know what their futures would be like, which is what I have gathered in the many talks I have with them,” she stressed, referring to the CITIRA committee report.
“There will be sunset provisions on a particular date, and the new dates are very clearly identified, so they know what they deal with. That is what I want. A vibrant economy that is predictable for our investors,” she added.
Cayetano said she plans to deliver her sponsorship speech on the CITIRA bill next week.
Meanwhile, the panel conducted its first public hearing on proposals to make passive income and financial intermediary taxes simpler, fairer, more efficient, and more competitive regionally under Package 4 of the Comprehensive Tax Reform Program (CTRP), also known as Passive Income and Financial Intermediary Taxation Act (PIFITA).
The hearing invited DOF Undersecretary Dr. Karl Kendrick T. Chua, who explained the ten reasons why the reform for the passive income and financial intermediary tax system is necessary. For each reason, he elaborated on the corresponding problems and the DOF’s proposed solutions.
In particular, individual citizens stand to benefit from the tax reform, according to Undersecretary Chua. Those individuals who put their savings (their passive income) in the bank will be taxed less, based on the proposed tax reform.
The Ways and Means Committee is set to continue discussions on the tax measures in the following weeks. #
Following the passage of the Sin Tax Law that substantially raises taxes on electronic cigarettes, Senator Pia S. Cayetano appealed to fellow parents to safeguard and educate their children from the dangers of picking up “these new dangerous vices” that seem to be targeting the youth.
“This is my call to all Filipino parents, please (discourage your children from) using these heated tobacco products (HTPs) and vapes. These devices are harmful to their health,” said the senator, who sponsored the sin tax measure in the Senate as Chair of the Ways and Means Committee.
The senator had initially pushed for higher tax rates on HTPs and vapes, citing evidence from health experts that such products could not be considered as effective cessation devices, and that they could cause harm to non-smokers and the youth.
“I based my position on [scientific evidence and] the recommendations of health advocates, no less than the World Health Organization (WHO), that we treat these e-cigarettes and HTPs equally as if they are cigarettes,” she stressed during a press conference with sin tax advocates on Tuesday (January 28).
“It is my job to veer on the side of safety. That ‘s why the position I’ve always taken is, unless there is convincing evidence that these are truly cessation products, and that these companies are willing to register them as such, then we should treat them as harmful products,” Cayetano added.
On this note, the senator reiterated her call for young Filipinos and non-smokers to avoid using e-cigarettes, HTPs, and vapes, as these could cause serious damage to their health.
“I call on all our young people. I will never get tired of reminding you that these products – HTPs, ENDS/ENNDS (Electronic Nicotine/Non-Nicotine Delivery Systems), and vapes – can be dangerous to your bodies. We don’t want you to take on these brand new vices,” Cayetano stressed.
Meanwhile, the senator expressed commitment to work with fellow legislators, other government agencies, and advocacy groups in assessing and strengthening the country’s smoking- and drinking-cessation programs. #
We welcome President Rodrigo Roa Duterte’s recent signing of the Sin Tax Reform Law, which raises the excise taxes imposed on alcohol and e-cigarette products.
The enactment of this measure is a manifestation of the administration’s full commitment to its mandate of protecting public health and welfare.
As Chairperson of the Ways and Means Committee, I had pushed for substantially higher sin tax rates under my sponsored Senate bill, to be able to meet the funding requirements for universal health care and to effectively deter the consumption of these harmful products.
Nonetheless, I remain confident that the law’s passage is a good step forward to discourage Filipinos, especially the youth, from taking up dangerous vices, thereby guiding them towards making healthier lifestyle choices.
Moreover, the revenues to be collected from this measure will go a long way in ensuring our people’s access to free and quality health care services. I thank our colleagues in the DOH and DOF, Congress, and pro-health allies for contributing to this landmark legislation. #
Speech of Senate Ways and Means Committee Chair Senator Pia S. Cayetano on the Bicameral Conference Committee Report on Sin Tax
Mr. President, as Chairperson of the Senate contingent to the bicameral conference committee that discussed the proposed sin tax reform measure, I now have the privilege to report to you the approved bicam version of our bill.
These are now the rates that the bicam committee adopted:
For fermented liquor, the specific tax rates will be raised to P35 in 2020, P37 in 2021, P39 in 2022, P41 in 2023, and P43 in 2024, with a 6 percent indexation in the following years.
For distilled spirits, the specific tax rates will be raised to P42 in 2020, P47 in 2021, P52 in 2022, P59 in 2023, and P66 in 2024, with a 6 percent indexation in the following years. There will also be an ad valorem tax rate of 22 percent beginning next year.
For sparkling and still wines, the fixed tax rate will be P50, with a 6 percent indexation in the following years.
For heated tobacco products or HTPs, the tax rate will be P25 in 2020, P27.50 in 2021, P30 in 2022, and P32.50 in 2023, with a 5 percent indexation in the following years.
For salt nicotine, the tax rate will be P37 in 2020, P42 in 2021, P47 in 2022, P52 in 2023, with a 5 percent indexation in the following years.
For free base vape products, the tax rate will be P45 in 2020, P50 in 2021, P55 in 2022, P60 in 2023, with a 5 percent indexation in the following years.
These rates are expected to generate P22.2 billion worth of revenues from alcohol and e-cigs during the first year of implementation, minus the VAT exemption on specific prescription medicines (P5.2 billion), which will bring the net incremental revenues from the measure to P17.1 billion.
Mr. President, I would like to put on record that as Chair of the Senate Ways and Means Committee, I had pushed for substantially higher sin tax rates under our Committee Report to meet the funding requirements for universal health care. Moreover, it is my firm belief that taxation can be an effective tool to deter the consumption of products that are deemed harmful to our people’s health. All this, while balancing the interests of the various industries involved.
But we also recognize that as a bicameral body, Congress works on the principles of fair, democratic deliberations and consensus building. Having said this, I thank my fellow legislators for their input and cooperation, which will now pave the way for the ratification of this meaningful measure. I remain confident that, albeit lower than what we originally proposed, the revenues to be generated under this sin tax measure would go a long way in protecting our people’s health and welfare.
Note: As manifested on the floor during Wednesday’s session (Dec. 18), the speech was not read by Senator Cayetano and was inserted into the Senate records.
The Sin Tax Bill has moved a step forward towards becoming a law.
Members of the joint panel of the Senate and the House of Representatives approved this afternoon the bicameral conference committee report reconciling the disagreeing provisions of the sin tax bill, which seeks to raise excise taxes on alcohol and e-cigarette products in the country beginning January 1, 2020.
Senate Ways and Means Committee Chair Pia S. Cayetano, along with House Ways and Means Committee Chair and Albay Representative Jose Ma. Clemente S. Salceda, led the bicam discussions held in the Senate on Wednesday that lasted for more than four hours.
Based on estimates of the Department of Finance (DoF), the approved bicam version will generate P22.2 billion in incremental revenues from alcohol and e-cigs during the first year of implementation. But due to an amended provision exempting specific prescription medicines from value added tax (VAT), revenues from the measure will decrease by P5.2 billion, for a total of P17.1 billion worth of net incremental revenues for 2020.
Earmarking of revenues from higher sin taxes would be undertaken as follows: 60 percent will go to the Universal Health Care (UHC) program, 20 percent to the Health Facilities Enhancement Program (HFEP) of the Department of Health, and the remaining 20 percent to programs seeking to attain the country’s Sustainable Development Goals (SDGs).
The tax rates approved by the bicam panel are the following:
– Fermented Liquor (specific tax rate): P35 in 2020, P37 in 2021, P39 in 2022, P41 in 2023, and P43 in 2024, with a 6 percent indexation thereafter.
– Distilled Spirits (specific tax rate with 22 percent ad valorem tax): P42 in 2020, P47 in 2021, P52 in 2022, P59 in 2023, and P66 in 2024, with a 6 percent indexation thereafter.
– Sparkling and still wines (specific tax rate): P50 in 2020, with a 6 percent indexation thereafter.
– Heated Tobacco Products or HTPs (specific tax rate): P25 in 2020, P27.50 in 2021, P30 in 2022, and P32.50 in 2023, with a 5 percent indexation thereafter
– Salt Nicotine (specific tax rate): P37 in 2020, P42 in 2021, P47 in 2022, P52 in 2023, with a 5 percent indexation thereafter
– Free Base (specific tax rate): P45 in 2020, P50 in 2021, P55 in 2022, P60 in 2023, with a 5 percent indexation thereafter
For her part, Cayetano admitted that she would have preferred the higher tax rates originally proposed under Senate Bill No. 1074. Nevertheless, the ways and means committee chair stressed that she respects the democratic deliberations that happened during the bicam, which paved the way for the bill’s approval.
“As a health advocate… I have two roles: increasing the tax for purposes of UHC [and using taxation] as a deterrent to the consumption of a product that is not healthy… I had hoped [for higher tax rates], but that is how democracy works, that is how we work as a bicameral house, so the figures we have are what they are and they will still go a long way,” the senator said.
“At the end of the day, I pushed [for this measure] until the very end. Pagkatapos nun, move on na. [We will] try to do a better job next time, [and] try to find additional sources,” she added.
“I am the kind of person who really sets my standards high. I really wanted to find enough funding to continually support UHC and to use the price imposed on sin products, whether it’s alcohol, ecig, or HTP, as a deterrent,” she explained.
“My next goal will be to really have advocacies and health campaigns to help people switch to healthier alternatives, because we don’t want young people, or even not so young [ones], to become addicted to a new bad habit,” she continued.
Senate members of the bicam panel included Senators Imee Marcos, Ronald Dela Rosa, Francis Tolentino, Koko Pimentel, Minority Leader Franklin Drilon, and President Pro Tempore Ralph Recto.
They were joined by their House counterparts, including Deputy Speakers LRay Villafuerte, Raneo Abu, and Deogracias Victor Savellano, and Representatives Estrellita Suansing, Jack Duavit, Sheena Tan, Sharon Garin, Teodorico Haresco Jr., and Jose Antonio Alvarado. #
*Statement of Senate Ways and Means Chair Pia Cayetano at the Sin Tax Coalition press conference (November 4, 2019).
Good afternoon, everyone. I am happy to see all of you, and I am very grateful for everyone’s support.
The job of seeing through, shepherding the sin tax is an exciting journey. It’s actually more exciting than I expected. And that’s because of all the support that many of you have shown.
I always visualize it as like a numbers job. But actually, from the day I started, because of the passion and commitment that I’ve seen in so many of you, from the Department of Finance, Department of Health, the advocates, and all the supporters, it’s really not about numbers. It’s really about lives, it’s about personal stories, it’s about changing lives. And the work that we do will really pave the way for a safer future for our children.
During the last few weeks, we had no session. So I took the opportunity to visit the experts in WHO in Geneva, I also spoke to the Ministry of Health in Denmark, the Ministry of Health in the UK, and I also met with the Public Health England Group, who were actually proponents of e-cigs.
So I’d like to believe that from knowing nothing about e-cigarettes, little by little, I am gaining more knowledge. I don’t believe anyone is born an expert, but over a period of time, we can all develop this kind of expertise and so, I will never claim to be able to handle this on my own, but at least I’d be able to contribute to the discussions among the experts. So I’d be happy to share my knowledge in the days to come.
Suffice it to say, the team of experts that we have in the Philippines provided me with all the information that I needed. I cannot really say I have learned anything new and earthshaking. It simply reinforced the information that I already had. And it’s good to know because I believe that my job is always to keep an open mind. If 10 years from now, it turns out a product that started as an e-cigarette mutated into something that is very safe, that has no detrimental effect, or addictive effect, I believe I should have an open mind in exploring what that product will be in the future.
So I continue to sit at this job with that kind of an open mind, but with the commitment that number one, this is a joint effort between the Department of Finance and Department of Health. And I am conscious of the need to balance the effects of taxation and our interest as healthcare advocates.
I always take the opportunity to say that I have no degree or training in health care. My training or background is [I’m] a graduate of economics and law. But on that note, I’ve spent more than 10 years of my life working with doctors and health professionals with my own advocacy on health care. So, I used that background when I entered this Committee on Ways and Means and continue to find that sweet spot, that balance.
I understand that those from the industries and even some of our colleagues find the rates that we are proposing on a high end, but we stand by those rates. And I am very happy that the Secretary of Finance has supported the rates that I came up with along with the team headed by Usec. Karl Chua.
I stand by this because I tend to always look at what’s happening around us globally. And I will never compare… I’d like to be as reasonable as possible. And I am always mindful that we cannot do what certain developed countries are doing. So when I compare, I look at neighboring countries, and I look at the region, and I see that despite the rates that we were looking at, which was already an increase, we still have one of the lowest taxation rates in the region.
Then I said, it’s our moral duty to make taxation an integral part of this comprehensive package. Because otherwise, sorry to put it this way, but parang naglolokohan lang tayo. If we want taxation to be part of a comprehensive package, then it should be a meaningful kind of taxation. Not the kind of taxation na, “sige na para lang masabing meron.”
I’ve never worked that way and will never be comfortable proposing a measure just for the sake of it. So at the start of session, I am starting it excited and I would really like to address the concerns of my colleagues. I have been talking to them on the side during session, during the breaks. I am looking forward to them putting on record their concerns about sin tax and addressing it. I think today, we’re going to start with Senator [Francis] Tolentino. He actually was with me in our WHO conference, so we hope to put on record a very exciting discussion.
Transcript of interview with Senator Pia S. Cayetano on sin taxes on alcoholic drinks
Reporter: There was an issue raised about corruption in PhiHealth. Sen. Gatchalian said before we hike taxes anew, why not reform that first? What can you say about that observation?
PSC: That’s why we have multiple committees in the Senate. One committee, which is the Blue Ribbon Committee, looks into that and the reason I accepted the position as chairman of the Committee on Ways and Means is because it is this time in our life span that we have a President that is very anti-corruption.
So if there’s any chance that this corruption issue should be addressed, it would be under this administration. So I am hopeful that as I take on the task to look for funding for our social programs, there are committees within the Senate and then there are agencies in the government that are addressing corruption issues that are very important.
Reporter: You don’t think that’s going to be a roadblock, that some senators might be hesitant?
PSC: It has never worked that way. My task in my committee is to hear the presentation of DOF on taxation and to hear the issues surrounding taxation. That is one issue but it’s not the only issue that I have to confront.
Reporter: The DOF said that the expected revenue from the House version is P16.6 billion. Are you likely to push for something higher for the Senate?
PSC: Well for me, as long as I am convinced about the goals set by DOH, the funding that they want to raise, and the other issues raised by the industries and other concerned parties are addressed, I am more than happy to target the goal of DOF.Because I work with the administration. So that is my goal. As to whether I’ll be able to deliver that, that we have to see.
Reporter: Ma’am you also asked a checklist from PhilHealth and DOH because you said you were concerned about what’s covered by the no-balance billing etc. to justify to the people the tax raise.
PSC: Actually, I am aware. Because my team and I are very much. We always check with DOH and PhiHealth what are the changes in their coverage. So I want it to be available to other legislators, both houses of Congress, even media, even other influencers when it comes to health.
Like I was talking to Dr. Willie Ong [Note: He was a guest in the Senate gallery during Tuesday’s session], he has such a huge following. Dapat alam namin itong lahat. So that when people ask, covered ba yan o hindi, alam na natin. Hindi na issue dapat kasi yung kung what is covered or not. The issue would be, when will something else be covered next, right?
I mean, that should be information at our fingertips. So we should be able to know that vaccination is covered. You go to the healthcare center, that is covered by DOH. That’s preventive medicine.
I know for a fact, appendicitis is covered. Pero certain cancers, I remember na-lobby namin na ma-include ang breast cancer. But I don’t think they are able to cover the entire treatment.
So we need to know that so that we can understand how much work we have to do para ma-complete pa yun. Kasi even in the most developed countries, wala pa naman akong nakita na lahat ng klase ng sakit, andami mong nakita nagfa-fundraising ng patakbo, ng mga bake sale, kasi healthcare is very expensive.
Reporter: As far as your advocacies are concerned, what is your wish list, conditions, accommodations, which should be under the no-balance billing?
PSC: Ang advocacy ko kasi is healthcare in general. Syempre may mga personal pa ako dun. Pero, it’s my job to detach myself from my advocacy and decide what is the best. The best is preventive healthcare.
So a big budget should be going to promoting the use of vaccination. That was my privilege speech yesterday. You know, we can talk about these catastrophic diseases – the reason you call it catastrophic is because minsan lang yan tumama, maliit lang ang percentage ng tinatamaan nito, pero mabigat, yun ang masakit, mabigat. Ito yung mga iba’t ibang klase ng cancer, ganun.
But if you compare that to vaccination, na-eradicate na nga yung polio, tapos ngayon babalik dahil ang mga nanay hindi pinapabakunahan ang mga anak, yun para sa akin very important.
It’s not just an advocacy, it’s preventive healthcare that will prevent the comeback of an ailment that was already eradicated from the Philippines. So that’s what we should focus on. We should put more funding into ensuring that this information penetrates through every mother who has to make that decision.
That’s very important. Inasmuch as my heart breaks, because my father had liver cancer. So pwede kong sagot sayo advocacy ko, liver cancer, diba? Marami ho akong kilala na nagkaroon din ng breast cancer. Pwede ko rin ipaglaban na yan ang advocacy ko.
But the reality is you have to look at the facts and the figures kung ano yung pinaka-prevalent na mga health issues. And that’s available naman sa DOH. But kaming mga legislators and other public figures who dispense our knowledge to the public should have that information para nase-share din nila ng tama.
Reporter: Regarding reduction in alcohol consumption… [Inaudible question / Note: Is there proof that raising taxes on alcoholic drinks really discourages drinking?]
PSC: Ako personally, I want to see the studies that really show us at what point does an increase in price affect the consumption. Of course we want to see that. Studies naman yan, data naman yan. We want to see that.
But on the other hand, I think it’s proven, I mean, you don’t have to be a social welfare expert. You just need to hear the stories to know that alcohol abuse is correlated to a lot of domestic violence, with your partner, with children, unhealthy home environments. That’s why it was made very clear that it was a public health issue.
Alcoholism is not just a social issue. It’s not just a problem of your neighbor. It’s a public health issue. When you have communities where children walk around and kaliwa’t kanan inuman ang vibe, that’s not a healthy environment for children to grow up with, right?
So these are really serious public health issues that we need to address. And is it partly because alcohol is easily available? Could be. I’ll tell you why. One of the arguments that they always tell us is don’t make it expensive so that it’s very easily available and affordable to the poorest of the poor.
And that sadly is an argument always in poor countries. So para na lang sinabi mo porke mahirap sila, sige lahat ng bisyo sa kanila ibigay. Pero yung mga ibang benefit na nakukuha ng may kaya, hindi naman binibigay sa kanila. Hindi naman tama yun, diba?
What you make available to them are the products that are harmful to them? How sad is that?
Reporter: Sa plain packaging proposal [for alcohol products], are you bent on that? Could you give us an overview?
PSC: I just came up with that because I was so disgusted by the fact that there is packaging for alcoholic beverages that clearly to me is attractive to children. [Questioning manufacturers] Why did you do that to children, to teenagers?
The fact that a grown man, like my colleague, Senator Bong Go, would say, “Wala bang ibang kulay nito?” It means cute siya. It means cute yung packaging. So kung ganyan lang gagawin nila, and to think that they cannot even think that it is irresponsible to package it that way, I’m gonna make it white and black packaging.
I will file a bill. I would say nga, this is inspired by the plain packaging that is already practiced I think in Australia? Canada? Plain packaging of cigarettes… My idea to recommend plain packaging for alcoholic beverages is inspired by plain packaging for cigarettes, which I believe is practiced in Canada or Australia.
Reporter: So for the Philippines, alcohol and cigarettes po ang magiging plain packaging?
PSC: Binabato ko lang naman yun kasi naiinis ako na hindi ko nakikita yung responsible standards na dapat nanggagaling mismo sa mga manufacturers. For me, hindi ko naman kailangan sabihin sa inyo na ba’t masyadong pa-cute yang packaging niyo?
Kung matanda umiinom niyan kailangan ba pa-cute yung packaging? Of course not. So that’s why sinasabi ko na if they cannot even moderate or police themselves, then I’m going to propose something like that.
Kasi for me it’s common sense. Sasabihin naman nila, “We’re not targeting the youth, nakalagay dun [sa package], ‘for 18 years and above.’” Ba’t ganun yung packaging? #