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.

Bicam approves Sin Tax Bill

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. #

Senator Pia Cayetano and Albay Representative Joey Salceda, ways and means committee chairpersons of the Senate and House, respectively, hold a media briefing following the bicam approval of the Sin Tax Bill.
Members of the bicameral conference committee of the Senate and the House of Representatives, following their approval of the final version of the sin tax bill on Wednesday (December 18).
Senate Ways and Means Chair Pia Cayetano stresses a point during the bicameral conference committee meeting on Wednesday to reconcile disagreeing provisions of the Sin Tax Bill.

Pia: My work continues to tax e-cigarettes for public health

Transcript of interview with Senator Pia Cayetano on President Duterte’s directive to ‘ban’ e-cigarettes 

Question (Q): What happens to the sin tax bill following the order of the President to ban vapes?

 

Sen. Pia: The way I look at it is my work continues. Because our President has really just expressed – from my understanding – his disappointment and exasperation with the e-cig industry. And that’s why he made that statement na “i-ban na yan.”

 

Because actually, all this time, he was waiting for all of us to do our job. And my job is to use taxation as a tool to protect the citizens, and of course, there’s also a fundraising measure as far as DOF is concerned.

 

But we have to understand the background. The background is, DOH issued an Administrative Order regulating e-cigarettes. And they said it in my hearing, they said it in consultations na ayaw ng mga industry ang AO na yan. The industry players said that they were not happy with that AO.

 

In fairness, there were also some industry players who said that they are happy to be regulated. Meanwhile, some of these people went ahead and filed cases to prevent FDA and DOH to regulate them. And these courts issued a TRO. So ngayon, we have products that are clearly harmful to the public [that are not being regulated]. We can debate and we can discuss it longer. But there is no doubt. I don’t know anyone in the business who will say safe na safe ito. There are health hazards there. And they are unregulated. Eh ‘di nabwisit si Presidente, so ang basa ko sa kanya, “Ah ganun ha? Ayaw niyo magpa-regulate, i-ban ko na lang kayo.”

 

And that’s how I feel also. Ayaw niyo magpa-regulate? Eh ‘di lumabas na kayo sa bansang ito. We’re willing to, and that was the direction that I was going. Taxation to me is just a means, a tool to help make these products that are harmful less accessible to the vulnerable, especially the youth.

 

Pero, meron din akong draft bill to regulate vaping and ecigs, etc. na ready rin akong isalang at i-defend as soon as mapasa ko na itong taxation portion. Kasi nauna lang naman yun because meron lang talaga tayong hinahabol na timeline.

 

Q: How will the ban affect the revenue generation of DOF?

 

Sen. Pia: Well, it’s very small compared to the overall collection. That is because e-cigs is still not widespread. It’s a new product. Bago lang yan. Ako nga hindi ko alam na may ganyang product until like a year ago na nakita kong may ganun.

 

So it will not contribute greatly immediately. I remember, DOF had said at some point, kung walang mako-collect diyan, okay lang kasi DOF recognizes that health comes first.

 

But I also understand that the President has also clarified his statement and I just have to push through with my part of the job. My job is to pass the taxation measure whether or not there’s an EO that comes out, if something comes out tomorrow, whether it’s a total ban or regulating, I have to be ready. Because this taxation measure has to be of a more or less permanent nature.

 

Paano kung temporary lang ang ban, tapos walang taxation measure in place? So I have to have that in place. And just to clarify also, there is actually a taxation measure in place. This was the law that was already passed last June towards the end of the 17th Congress [Republic Act 11346]. So that will be the one that will come into effect in January if I don’t push through with this measure and there is no ban.

 

So I have to push through in anticipation. I cannot assume na mato-total ban yan. I have to still do my job.

 

Q: Legally speaking, is the EO powerful enough to stop the entry of vape products and use, etc.?

 

Sen. Pia: You have to recognize, first of all, like I mentioned, again let’s go back.

 

DOH issued an AO. DOH time and again, and FDA, has the power to protect the public from health risks. That is their inherent power. Kung lahat na lang ng risks, let’s say itong sa polio, aantayin nila ang legislature, mahirap yun. There are parts of the work of the Executive that require immediate action.

 

So, DOH cannot always be waiting for the legislature to pass something. It is inherent in the Constitution, Article II Section 15 says that it is the State’s duty to protect the people’s health.

 

So may powers and responsibility ang DOH diyan and that goes without saying ang DOH naman is just an arm of no less than the President. They are under the President, so the President will also act that way.

 

But, I am not going to debate right now what is covered by the legislative powers and the executive powers. For me, you look at it on a case-to-case basis. Right now, the regulations that are supposed to protect the people from the harmful effects of e-cigarettes, vapes, heated tobacco products, otherwise known as HTPs, has been TRO’ed.

 

Kung ako din ang Presidente, sasabihin ko sa kanila, “Ah ganun, ni-TRO niyo yung aking health arm? ‘Di sige, i-ban ko na lang kayo.”

 

Q: Just to be clear, the bill you will push is just to regulate e-cigarettes or to institutionalize banning?

 

Sen. Pia: Right now, on the floor is the taxation measure that you know. So as of now, as of the past few months, I was pursuing, I was going along the lines of the direction of the Executive, which is to highly regulate.

 

The President and even DOF Secretary, DOH, have been very clear that there are harmful effects of ecigs. And I myself went to WHO and have confirmed this. Everything I heard in the hearings were confirmed during my trips abroad that we are dealing with a harmful product. So it must be regulated. And as I said, taxation is a means to regulate it for health purposes.

 

Meanwhile, for the health side, there are bills – I looked at it, I am actually vice chair of the Committee on Health and as you all know, an advocate for health. There are pending bills but I intend to file a bill, which I believe is more comprehensive and is more reflective of the need to highly regulate a product that poses a health risk to the Filipinos.

 

Wala pa ang bill na yun. It’s in the drafting stage. And if you recall, I’ve been busy as the chair of the Committee on Ways and Means, but my interest is always health. So my trip to WHO has given me more knowledge.

 

Actually, during the budget, I was reviewing that bill on the side. I’d say it’s about 90% complete. I just really wanted a few more revisions. But I’ll be ready to file that anytime.

 

Q: The filing will come after the taxation measure passes?

 

Sen. Pia: Hindi naman. If may time naman ako to finalize that bill, I will file it. And that bill, as I said in answer to your question, is going along the direction of highly regulating.

 

Si Senator Tolentino, whom I worked very closely with – he was in WHO – is for a total ban. Kasi for me, it’s a thin line. Ang aming understanding of the health risk is exactly the same. It’s more of the appreciation of what would work better in our country, a total ban or highly regulating [these products]?

 

Part of me wants total ban. But the other part of me is okay with highly regulating. And this is where I want to share this conundrum that I face, because here you have industry players saying, “I-regulate niyo kami, mas gusto naming ma-regulate para ma-weed out natin ang mga fly-by-night diyan and those that might produce products that don’t comply with the safety standard.”

 

But meanwhile, ni-TRO naman nila ang pagre-regulate ng FDA and DOH. ‘Di ngayon, unregulated. Paano ba yun?

 

Q: Can you be more specific, ano ang ibig sabihin ng “to highly regulate”?

 

Sen. Pia: What I mean by saying ‘highly regulate’ is, it can be sold but there are many -not just guidelines, but there are many dos and don’ts. And those dos and don’ts, I will enumerate.

 

But offhand, you cannot sell to the youth and, in this case, I have expanded it to young people. Because ang brain, there is evidence that shows that the brain continues to develop until 25 years old. So at the age of 19, hindi ka na [minor], pero ang brain mo and decision-making skills mo are still very susceptible to persuasion, to advertisement and all that. So, that’s one way of regulating – that you ban the youth and even young people.

 

Advertising, you highly regulate that. You either totally ban or you only allow it in limited spaces. So that’s what I mean, maybe we can have a separate discussion on that. But I am giving you a glimpse of what I mean by highly regulate. And even the places where you will sell.

 

I’d love to give you this example. In the United Kingdom, where they actually allow e-cigs to be sold freely, the reason for that is because their cigarettes are highly regulated. You cannot enter a store and see cigarettes anywhere. So nag-drop na ang consumption ng youth nila.

 

So now, with the e-cig business, it appears that their youth is not vulnerable to it the way the youth in the US is. Because there are no cigarettes around. You can’t enter a store and find it. In fact, I wanted to make a point of buying, I kept forgetting because every time I enter a convenience store, you won’t see it.

 

So ang cigarette industry nila – I’m referring to cigarette industry – is highly regulated. And this allowed them to now look at what e-cigs can do for them. They are not allowing it na walang regulation, ha? Kasi for them, it is still a harmful product. Pero medyo liberal sila in allowing it as an alternative to cigarettes.

 

Q: So the direction towards eventually banning the selling of e-cigs in convenience stores will be part of the bill?

 

Sen. Pia: If you ask me, it should be included in the debates, because it’s a harmful products. And all across the world, connected pa rin kasi yan sa cigarettes. So, cigarettes in other parts of the world, very regulated na ang kanilang pagbebenta.

 

So si e-cigs, saan pumapasok diyan? Eh parang tayo, nafa-fast forward. Hindi pa nga natin totally nare-regulate ang cigarettes, nandito na si e-cigs.

 

So gusto ni e-cigs, “Huwag niyo naman kami masyadong i-regulate, ang cigarettes nga hindi niyo nire-regulate.” That’s not an excuse, eh ‘di i-regulate kayo pareho ng mas matindi. Dapat naman talaga ma-regulate silang pare-pareho.

 

Q: Does the order to ban e-cigs have an effect on the President’s directive to certify the sin tax bill as urgent?

 

Sen. Pia: No. I don’t believe so, because like I mentioned, the President is very vocal about his concerns, ang ideas niya, he will really just say it. So my understanding is, just like me, when he says, “I-ban na lang yan,” it’s because of the facts that he’s faced with. It’s because of the annoying reality that these people don’t want to be regulated and then there are courts that actually felt that the business interest of these vaping companies are more important than the welfare and health of the Filipinos.

 

It boggles my mind. At si Presidente din, takang taka kung bakit ganyan sila magdesisyon. ni-TRO nila ang Department of Health and FDA.

 

Q: Will the sin tax bill be approved before the year ends?

 

Sen. Pia: I hope so. I have been having more detailed discussions with my colleagues. And I have expressed the request of DOF that we expedite this. So napapag-usapan na yan. And I have requested na magkaroon ng caucus right after the budget and that we prioritize the debates. Kasi ready naman ako.

 

Q: Does the caucus have a schedule already?

 

Sen. Pia: Sinabi ko naman kay SP [Senate President Vicente Sottto III] na gusto ko sana mag-caucus right after. Syempre, ayaw ko naman makagulo dahil hilong hilo na kaming lahat sa long hours ng budget. But hopefully. Kasi period of amendments na lang naman kami. So kung masisingit ko yun during one afternoon, para ma-explain ko na and ma-discuss din itong effects ng ban, baka iba-iba din ang ideas nila.

 

Ako, I want to say that tuloy natin ito. Kasi it’s just a question of rates. I don’t think anyone is not for taxing these sin products, it’s just a question of rates. So I wanna just sit down and discuss with them, “Saan tayo ngayon?” kasi ako, I stand by the rates that I propose.

 

Thank you! #

To tax or ban e-cigarettes? Pia to wait for President’s EO banning e-cigs

Reaction to President Duterte’s directive to ban e-cigarettes
By Senator Pia S. Cayetano  
Chairperson, Senate Committee on Ways and Means
.
Over the months,  I’ve read numerous studies and reports on e-cigarettes, conducted hearings, had discussions with health advocates, including experts in WHO, and listened  to the industry  and the speakers they arranged for me to meet. All of these led me to conclude that:

 

– We are dealing with products that clearly  have health risks despite industry and their supporters saying the risks are less than smoking and that they are an effective device to help smokers quit;

– These health risks are still being documented and studied;

– Some of these products have caused deaths and severe illnesses in various forms.

What this means is that we must really assess if this is a product that should be outright banned, as has been already done in some countries like Australia, Singapore, Brazil, etc., or strictly regulated, which was the direction I was taking as Chairperson of the Senate Ways and Means Committee.

Meanwhile, the President’s recent pronouncement to ban e-cigarettes is an assertion of the authority of the State to restrict the use of any consumer product that endangers public health. I agree that when the people’s health is at risk, public interest must always take precedence over any business or commercial interest.

As a backgrounder, it is important to note that the e-cigarette industry was previously given the opportunity to work and thresh out issues with the government. The Department of Health (DOH) issued Administrative Order (AO) 2019-0007 last August precisely to lay down regulations for e-cigarette products. Unfortunately,  members of the industry chose to question the AO in court instead of welcoming government regulation.

In the meantime, the very first case of electronic cigarette- or vaping-associated lung injury (EVALI) was reported in the country last weekend, involving a 16-year-old girl.

No issue can be resolved if members of the industry would insist on shunning any form of regulation by constantly suing the DOH and Food and Drugs Administration (FDA)! With this attitude,a  ban is really in order.

I await the EO from the President. Until then, these products that everyone, even those in the industry, recognize as harmful are in the market, and should be taxed. And it is still my job to see this bill through.#
Senate Ways & Means Chair Pia Cayetano holds a giant prescription with health experts during the Sin Tax Coalition’s press conference in the Senate. The coalition had called on other senators to pass the bill seeking to raise taxes on e-cigarettes & alcohol. (Photo: Senate PRIB)

Pia gears up for daily debates on Sin Tax

“Sin tax reform is not just about numbers. It’s really about changing lives. And the work that we do will pave the way for a safer future for our children.”

Thus said Senate Ways and Means Committee Chair Pia S. Cayetano, as she prepares to defend her proposed tax rates under Senate Bill (SB) No. 1074, which seeks to raise excise taxes on alcoholic beverages and electronic cigarettes, including heated tobacco products and vapes.

The Senate is set to resume floor debates on the tax reform measure on Tuesday (November 5).

“I am ready and I will make myself available every day in my effort to get this bill approved as soon as possible,” according to Cayetano.

“I would really like to address the concerns of my colleagues about sin tax. We hope to put on record a very interesting discussion,” she added.

The senator said she is prepared to present all the data to back her proposed tax rate hikes under SB 1074. “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.”

Cayetano said the chances of the tax reform measure being approved in the Senate this year are high. She clarified, however, that fellow senators would be given sufficient time to raise their concerns during the plenary debates.

“As long as there is enough time for my fellow senators to prepare their questions, it’s a reasonable expectation [that the bill will get approved]. We really give each other enough time to ask those questions. So I am making myself available in the next few months for interpellation.”

The Department of Finance (DOF) has estimated that SB 1074 would generate P47.9 billion for the Universal Health Care (UHC) program next year, and a total of P356.9 billion for the program over the next five years.

The senator particularly stressed the need to increase the country’s tax rates on alcohol, citing that the Philippines has among the lowest prices of beers, hard liquors, and wines in the ASEAN region.

“Ang baba ng presyo ng ating mga alak kumpara sa ibang bansa sa ASEAN. Kaya talagang panahon na po na taasan natin ito,” she stressed.

The Philippines has the third lowest price of a 330-ml beer in the entire region, next to Vietnam and Cambodia. It also has the second lowest prices of a 700-ml bottle of gin and a 750-ml bottle of wine in ASEAN, next to Vietnam and Brunei, respectively.

“If we want to make taxation an integral part of our comprehensive [health] package, then it should be a meaningful kind of taxation. I will never be comfortable with proposing a measure just for the sake of it,” Cayetano asserted.

Meanwhile, the senator acknowledged growing public support for higher sin tax rates.

At the resumption of session on Monday (November 4), doctors, youth and civil society groups held a mobilization and press conference in the Senate to express support for Cayetano and urge other senators to approve SB 1074.

“I feel it’s very important that you continue your advocacy on the ground. We will do our part, but in the community level, your work is truly vital. We’re very happy that there are young people who are also taking the initiative to support our proposal,” Cayetano told the coalition members.

She said the ultimate goal of Sin Tax is to reduce deaths, sickness, and other hazards caused by excessive drinking, as well as to address social problems linked to alcoholism like domestic violence, crimes against women, and road accidents resulting from drunk driving.

Moreover, she said the measure seeks to protect Filipinos, especially the youth, from the dangers of vaping. #

Senator Pia Cayetano gives updates on SB 1074 before members of the Sin Tax Coalition at a press conference held in the Senate.

More than revenues, Sin Tax is about changing lives – Pia

*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.

So again, thank you very much to everyone. #

Pass Sin Tax for people’s health: Doctors supporting higher excise taxes on alcohol and e-cigarettes present a giant prescription calling for the passage of the Sin Tax bill to Senate Ways and Means Chair Pia S. Cayetano. Proceeds from the measure will augment funding for the government’s Universal Health Care program. (Senate PRIB / Joseph Vidal)
Senate Ways and Means Chair Pia Cayetano holds up a ‘tomb stone’ showing the health hazards of alcohol consumption at the Sin Tax Coalition press conference held at the Senate on Monday.

 

 

Pia: Congress has jurisdiction to tax e-cigarettes

Amid rising concerns in many countries about the health risks of electronic cigarettes and vapes, Senator Pia S. Cayetano reiterated that Congress has the jurisdiction to impose higher taxes on these products as a means to regulate their use.

 

The chairperson of the Senate Committee on Ways and Means, Cayetano made the assertion at the start of plenary debates on Senate Bill No. 1074, which seeks to raise ‘sin’ taxes on alcohol and vaping products. 

Responding to the questions of Senator Francis Tolentino, Cayetano clarified that Congress has already imposed taxes on e-cigarettes since the enactment of Republic Act 11346 earlier this year. 

Tolentino had asked Cayetano whether Congress can impose a tax on e-cigarettes, even if these products have yet to be given certification by the government through the Food and Drug Administration (FDA). 

“As to whether we can tax a product that’s not been given permission to be sold, let me point out that under RA 11346, we (lawmakers) have already taxed e-cigarettes,” Cayetano noted. 

“So this committee is not proposing a new kind of tax. It’s already recognized by Congress under its jurisdiction. This committee is just increasing that tax,” she added. 

Cayetano pointed out that taxation is “just one tool” that would help curb these new kinds of vices. She said other pro-health initiatives should be put in place to complement the sin tax bill. 

“Taxation is not the end-all, be-all. So we must help our health department come up with measures to provide a health approach to the problem of smoking and drinking,” she said, while expressing her plan to push for additional regulatory measures on e-cigarettes.

The senator said she is in the process of drafting a bill mandating the government to “look into the harmful effects of e-cigarettes,” which shall be referred to the Committee on Health. 

She also intends to draft a measure that would regulate the marketing and ban the advertising of e-cigarettes in the country. 

“Exposure to these products will be dangerous because the science is not yet clear about its dangers. I’m concerned for the young people in general as these products can easily entice them,” she explained. 

“Our goal is to reduce people’s consumption of these sin products, on top of generating more revenues to finance our Universal Health Care program,” she stressed.

A total of 42 countries worldwide have already banned the use of e-cigarettes, while 10 countries banned the use of heated tobacco products (HTPs) due to growing evidence that such products are dangerous to people’s health.

Earlier this year, the FDA gave manufacturers, importers, and retailers of e-cigarettes three months to register and comply with specific regulations before they could sell their products legally.

These include a license to operate and the issuance of a certificate of product registration. The three-month period is set to end this October. #

Senator Pia Cayetano: Taxation is “just one tool” to help curb new kinds of vices. She said other pro-health initiatives should be put in place to complement the sin tax bill. 

Pia: PH is global ‘inuman’ champion; Sin Tax Reform to save lives

The Senate Ways and Means Committee, under the chairmanship of Senator Pia S. Cayetano, has presented to the plenary Senate Bill No. 1074 seeking to increase excise taxes on sin products, with the objective of augmenting funds for universal health care and protecting citizens, particularly the youth, from the harmful effects of drinking and electronic cigarettes. 

Delivering her sponsorship speech on Wednesday (September 25), Cayetano stressed the need to impose “significantly higher” tax rates on alcohol, e-cigarettes, and heated tobacco products (HTPs) in order to safeguard Filipinos’ health and wellbeing.

Cayetano’s committee is proposing the following excise tax rates for the different types of alcohol products:

Distilled spirits: an ad valorem tax of 20% and a specific tax of Php 90 per proof liter on Year 1, to be increased by  Php10 every year until Year 4, and by 10% every year thereafter.

For fermented liquor and alcopops: a specific tax rate of Php 45 per liter on Year 1, to be increased by Php10 every year until Year 4, and by 10% every year thereafter. 

For wine products: a specific tax of Php 600 per liter for sparkling wines and Php 43 per liter for still and carbonated wines, to be increased by 10% every year thereafter.

The Ways and Means Chair explained that the specific tax rate on distilled spirits was raised to Php 90 because they have the highest alcohol content among the different types of alcohol products, and as such are the most harmful to people’s health. 

Furthermore, the Committee proposed to tax e-cigarettes, HTPs, and vape products the same rate as conventional tobacco products.   

The Committee proposed to tax HTPs at P45 per pack of 20 in 2020, increasing such rate to P5 per pack per year like regular cigarettes. For vape products, the recommendation is to tax those containing freebase nicotine at P45 per 10ml or a fraction thereof; and those containing nicotine salts at P45 per 1ml or a fraction thereof. 

Alcohol

In pushing for higher taxes on alcohol, Cayetano said there is “glaring evidence” that the excessive use of such products endangers people’s health. 

“Alcoholism is associated with at least 39 main diseases, including liver cirrhosis, cancer, pancreatic disease, hypertensive disease, tuberculosis, diabetes, and even behavioral and psychotic disorders,” she said, citing a report by the Global Burden of Disease Study.

Also, World Health Organization data revealed that in 2016, 4,431 per 100,000 population of Filipinos died from liver cirrhosis; while 16,418 died from hypertensive diseases; and 8,526 from tuberculosis. 

“All of which were due to the excessive use of alcohol,” Cayetano pointed out. 

“The impact of our problem on alcoholism is not felt by the drinker alone,” she further stressed, adding that excessive drinking is also a common cause of road crashes and a contributor to family violence.

The senator lamented that, with these products becoming more accessible to vulnerable sectors, there is a risk that these numbers and incidents would continue to grow. Hence, the need to increase their prices and make them less affordable.

Cayetano said the measure seeks to address the high drinking prevalence among Filipinos, who on average are already consuming 11 liters of hard alcoholic beverages per year. This is higher than the global and ASEAN averages of below 10 liters. 

“Global champion na po tayo, sa inuman.  But that is not something we should be proud of,” the senator said, adding that the prices of alcohol in the country should not be so cheap as to allow Filipinos, especially the young people, to easily have access to them.

E-cigs and HTPs

 “For the sake of our children, we must regulate and tax e-cigarettes at parity with regular tobacco products. Other countries are already doing this. We should at least keep pace.  Vaping is not cool when it leads our kids to the path of new addictions,” Cayetano said about e-cigarette products.

The senator questioned the position of manufacturers and distributors who claimed that e-cigarettes are a viable and less harmful alternative to conventional smoking.

“The industry claims that it is a safer product but medical experts have pointed out that safer does not mean safe or risk-free. We have already seen and heard an avalanche of news of people who died because of lung failure in the United States – people who were consistent users of these vape products,” she said.

“Thus, Mr. President, this representation asks that we err on the side of caution,” she added during her speech.

Apart from the sin tax bill, Cayetano said she plans to file more measures seeking to address the country’s problems associated with alcoholism and the dangers of vaping among the youth.

“This Committee is tasked with the taxation of these products. But this, in no way, limits DOH [Department of Health] and Congress to undertake steps to protect the health of the people,” she said.

“We remain cognizant that taxation is just one tool and that a comprehensive strategy is necessary. We urge DOH [Department of Health] to work with our medical community on this through aggressive interventions and policies.” #

Senator Pia Cayetano: “Global champion na po tayo, sa inuman.  But that is not something we should be proud of.”
Senator Pia Cayetano: “For the sake of our children, we must regulate and tax e-cigarettes at parity with regular tobacco products.

Pia to industry: Help educate, not mislead public on sin taxes

Senator Pia S. Cayetano appealed to alcohol industry players  to refrain from misleading the public into thinking that raising ‘sin’ taxes on alcoholic beverages, which would also increase the cost of these products, is detrimental to Filipinos, particularly the poor.  

“When we’re talking about [taxing] sin products, please do not scare the people into thinking that what [the government is] trying to do is harmful to the Filipino people,” the senator stressed in an interview at the Senate.

Cayetano chairs the Senate Ways and Means Committee that tackles the proposed measures seeking to increase sin taxes on alcohol and e-cigarette products (Package 2+ of the Comprehensive Tax Reform Program or CTRP). 

The panel on Thursday (August 29) conducted its second public hearing on Senate Bill No. 383 and House Bill No. 1026 – Increasing the Excise Tax Rates on Alcohol Products and E-Cigarettes.

Industry leaders were given the opportunity to present their position on proposals to raise taxes on alcohol products to augment funds for the government’s universal health care program. A particular argument raised by Distilled Spirits Association of the Phililpines (DSAP) President Olivia Limpe-aw was that hiking taxes on their products would “deprive the poor of their little happiness.”

Cayetano, in response, stressed that the poor deserve a “better kind of happiness” – one which will not cost them their health and their families’ wellbeing. 

“I would often hear, ‘Do not deprive the poor of the things that make them happy,’ supposedly alcohol and cigarettes. That is such a sad, sad fact. Because in the long run, that is what causes them so much misery,” she said. 

“If it is our goal to become an upper-middle income country, can we not leave our poor with this kind of happiness [harmful vices like smoking and excessive drinking]? Can we offer them instead a better kind of happiness, including educating them as to the right choices they could make?” she asked. 

Furthermore, the senator warned industry players against painting a false picture that the proposed sin taxes would lead to job losses.  

More than anything, Cayetano said the country’s alcohol problem causes more damage to millions of Filipino families in terms of related diseases, road crashes, domestic abuse, and crimes, and therefore should be addressed through a variety of public health interventions and social reforms, including taxation. 

“If you’re going to say that there’s X amount of people to lose jobs, then I am going to dig up all the figures to show how many families are affected by the same sin products – how many deaths, how many battered women, how many neglected children,” she emphasized. 

The senator, a staunch health advocate, also had this appeal to members of media: “Ang pakiusap ko sa inyo, don’t use these [one-sided] stories without also including stories about the deaths [caused by alcohol consumption], the children who are violated, and the women who are left homeless or who have to give up food on the table [in favor of spending on alcohol].” 

Meanwhile, the senator said she would continue to keep open mind in considering certain concerns raised by industry during the hearing. The Ways and Means Chair plans to create a technical working group to reconcile the positions of the Finance department with other stakeholders before finalizing the committee report next month. #

Senate Ways and Means Committee Chair Pia S. Cayetano leads the panel’s second public hearing on sin taxes on alcohol products on Thursday, August 29.
In a media briefing, Senator Pia S. Cayetano rejected the argument raised by an industry representative that raising sin taxes would deprive the poor of their ‘little happiness’ [alcohol and cigarettes]: “That is so sad. Can’t we offer them instead a better kind of happiness?”
The second public hearing of the Senate Committee on Ways and Means gathered alcohol industry leaders, health advocates, civil society groups, and government agencies to deliberate on proposals to raise taxes on alcoholic beverages.

Pia open to higher sin taxes on alcoholic drinks in the Senate

Senate Ways and Means Chair Pia S. Cayetano on Wednesday (August 21) said she is inclined to go with the Department of Finance’s (DOF) proposal to raise excise taxes on alcoholic beverages, with the goal of generating more funds for the Universal Health Care (UHC) Program.

“Technically, I have not adopted anything yet. But I have an open mind to go towards the version of the DOF,” the senator said during the Kapihan sa Manila Bay press briefing in Cafe Adriatico, hosted by journalist Marichu Villanueva. 

This was in reaction to questions on whether her committee would push for higher sin taxes on alcohol compared to the recently approved House version of the measure. 

House Bill No. 1026 was passed on third and final reading on Tuesday (August 20), seeking to impose higher excise taxes on alcohol, heated tobacco, and vape products.

The measure proposes to increase specific taxes on distilled spirits to P35 per liter in 2020, with an ad valorem tax of 22 percent. It also seeks to hike specific taxes on fermented liquors to P32 per liter starting 2020.

The DOF, however, wants to pass a higher version of excise tax rates on alcohol products.

Under their proposal, specific taxes on distilled spirits will be raised to P40 per liter starting 2020, with an ad valorem tax of 25 percent; while specific taxes on fermented liquors, including alcopops, will be raised to P40 per liter by 2020.

The DOF version is targeted to generate P33 billion worth of revenues to fund the UHC program. This is double the amount that the House version is expected to collect, which is P17 billion in one year.

“The primary objective of [increasing excise taxes on sin products] is to support our Universal Health Care program… That’s where my passion is coming from to make these [tax reforms] happen,” Cayetano said. 

“If it will be brought to my attention that it’s excessive and not reasonable, then we will have to adjust. But until then, those are the figures that I am looking at,” she added. 

Meanwhile, the senator assured that her committee will give all stakeholders the opportunity to explain their position in the Senate hearings before she finalizes the committee report.

“Ang goal ko is to have hearings every week. I just want to be sure that all the stakeholders have a chance to be heard on record,” she stressed.#

“The primary objective of [increasing excise taxes on sin products] is to support our Universal Health Care program. That’s where my passion is coming from to make these [tax reforms] happen.” – Senator Pia Cayetano