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Home » , » Pnoy signed Sin Tax Bill as Urgent

Pnoy signed Sin Tax Bill as Urgent

Written By Jane Miranda on Thursday, May 17, 2012 | Thursday, May 17, 2012

President Benigno S.C. Aquino III said in a radio interview yesterday that he has certified House Bill No. 5727, now awaiting plenary action in the House of Representatives, that restructures the excise tax on tobacco products and liquor in order to raise collections from these sources.

"I recently signed the certification as urgent," Mr. Aquino said, referring to HB 5727. "We would like to discourage smoking and drinking because of high health-care costs."

It was approved by the House ways and means committee last May 9.

The certification, contained in a letter addressed to the Senate President and House Speaker, has yet to reach Congress. A check with the Presidential Legislative Liaison Office showed it had not received a copy as of press time.

He said the old law apparently favors only one firm, which in effect discouraged other potential investors to join the market.

The existing law has diminished competition in the industry and eventually led to a monopoly that only proved to be detrimental to tobacco farmers.

Proponents of the bill had pressed for the Palace’s certification, saying the President’s stamp of approval would encourage lawmakers to "hop on board" despite expected lobbying by affected industries.

The important government programs include assistance to indigents and the informal sectors under the National Health Insurance Program, as well as the rehabilitation and development of regional health units and district, provincial, and regional hospitals.

“Beyond ensuring the health and well-being of all Filipinos, revenues from an updated excise tax system will also benefit both tobacco-growing and non-tobacco-growing provinces,” Abad said.

The certification will allow Congress to approve the measure on second and third reading on the same day. Under current rules, a bill can be approved on third reading at least three days after it is passed on second reading to give lawmakers time to read any amendments, House Majority Leader Neptali M. Gonzales II (Mandaluyong City) explained in a text message.

He said the House has scheduled plenary debates on the measure next week in hopes of transmitting it to the Senate before the second regular session of the current Congress ends on June 7.

Senator Ralph G. Recto, chairman of the Senate ways and means committee, said via text the bill will be on top of his panel’s agenda, although he did not commit to a deadline for its approval. "As soon as it is passed by the House and transmitted to the Senate, we will prioritize consideration. We will place it up front and center."

HB 5727 sets excise taxes to two tiers for tobacco products and three for liquor, depending on net retail price. The National Internal Revenue Code (NIRC) currently sets four tiers, which the Finance department argues only encourages people to shift to cheaper products.

The bill also sets an 8% increase on excise taxes every two years from 2015-2025, compared to NIRC’s requirement of adjustments at the same pace but with no specification on the increase.

“The increase is very high... [in] how the rates are planned over the years,” Philip Morris Fortune Tobacco Corp. (PMFTC) President Chris Nelson said on Friday.

Low-priced cigarettes, for example, will be taxed P10 on the first year of implementation, almost four times the P2.72 imposed today, he said. The tax increases to P22 in the second year.

The sharp rise in taxes will cut demand and create unemployment for the 2.9 million people in the tobacco industry, Mr. Nelson claimed, adding it can also encourage illicit trade.

Earlier, the World Health Organization (WHO) had pushed for higher taxes for tobacco in the Philippines as the country’s cigarettes were among the “cheapest in Asia.”

WHO records showed that in the Philippines, the “most popular brands” cost an average of less than $0.50 per pack.

By contrast, in Lao People’s Democratic Republic, cigarette prices are pegged at $1 per pack; $3 in Malaysia; $6 in Hong Kong and $9 in Singapore.

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