Sin tax to go a ‘long way’ in protecting people’s health, welfare

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.

Senate Ways and Means Chair Pia Cayetano confers with members of the House panel during the bicameral conference meeting on the Sin Tax Bill. (L-R) Deputy Speaker (DS) Deogracias Victor Savellano, DS LRay Villafuerte, Rep. Jack Duavit, Rep. Estrellita Suansing, and House Ways and Means Chair Joey Salceda.
Tax sin products for people’s health: Senator Pia S. Cayetano with fellow bicam panel members Sen. Francis ‘Tol’ Tolentino and Sen. Aquilino ‘Koko’ Pimentel.
Senate ways and means committee chair Pia Cayetano greets finance secretary Sonny Dominguez, who made a surprise visit at the bicam meeting and watched the proceedings from the sidelines.
Bicam bill is signed! (L-R, 1st row) Deputy Speaker (DS) Deogracias Victor Savellano, DS Raneo Abu, Sen. Francis Tolentino, Senate WAM Chair Pia S. Cayetano, House WAM Chair Joey Salceda, Rep. Sharon Guarin (L-R, 2nd row) Senate Minority Leader Franklin Drilon, Rep. Estrellita Suansing, Sen. Ronald ‘Bato’ Dela Rosa (partly hidden), Sen. Imee Marcos, Sen. Aquilino ‘Koko’ Pimentel, Rep. Jose Antonio Alvarado, DS LRay Villafuerte, Rep. Sheena Tan, Rep. Jack Duavit, Senate President Pro Tempore Ralph Recto, and Rep. Teodorico Jaresco, Jr.
Standing tall: Joint press conference by Senator Pia S. Cayetano and Albay Rep. Joey Salceda, Ways and Means chair of the Senate and House, respectively, to announce the bicam approval of the sin tax bill.
Hands-on: Senator Pia Cayetano watches as Senate plenary pages facilitate the signing of the bicam committee report on the sin tax bill among the senators.
Light moment with Senate Minority Leader Franklin Drilon. Both senators were instrumental in the passage of the 2012 Sin Tax Bill (RA 10351).
Despite lower-than-desired rates, Senator Pia Cayetano believes that the 2019 sin tax measure would still go a ‘long way’ in protecting people’s heath and welfare.

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