Passage of the sin tax reform bill is long overdue and cigarette and alcohol companies are distorting the facts to pressure lawmakers not to pass the bill, the Department of Finance (DoF) said yesterday.
Assistant Secretary Ma. Teresa Habitan, the DoF official who prepared the position paper to be submitted by Secretary Cesar Purisima to Senate ways and means committee chairman Ralph Recto, said prices of alcohol and cigarettes didn’t increase even by five centavos when Republic Act 9334, the original sin tax bill, was passed in 2005.
It so happened because the list of the National Internal Revenue Code (NIRC) stipulated that under the law, prices of alcohol and cigarettes should not increase as it was the products’ prices despite the fact that the NIRC listing was done nine years before RA 9334 was passed.
The NIRC list was prepared when government shifted its tax base from ad valorem to specific. Before the list was prepared, according to Habitan, it was agreed that prices of alcohol and cigarettes will be adjusted from low to medium price.
But because there was no law that mandates BIR to put prices of alcohol and cigarettes to medium, the price was never touched and remained at low price bracket.           
“That NIRC list is so powerful that not even a law can supersede it. It was the Supreme Court that said only a new legislation can push prices of alcohols and cigarettes up,” Habitan told the Daily Tribune.
The assistant secretary said without batting an eyelash that alcohol and cigarette manufacturers have long been cheating the government because these firms keep on saying that sin products in the Philippines are already heavily taxed, thus a stronger version of sin tax law is not needed anymore.
“They have been cheating for so long,” Habitan said.     
Another DoF official who doesn’t want to be named said sin tax of the country is one of the lowest in Asia, thus any increase is most welcome.
“Sin tax is very low and should be adjusted upward to the level of our neighbors,” he said.
“Almost no tax on lowest priced drinks due to protection under old law and a small adjustment results in big percentage rise. Being calibrated to make it lower,” the official explained.                  
Habitan said the P33 billion incremental revenues per year to be generated when sin tax reform bill is passed will go a long way in funding government programs that aim to help needy people.   
According to Senate President Juan Ponce-Enrile, the Senate ways and means committee must wait for the official inputs of the DoF before finally deciding if the reform sin tax bill will be passed or not.    
“It is going to be bloody. It will take long deliberations,” Enrile was quoted as saying.
The 87-year-old senator claimed he is concerned on reports that prices of cigarettes and liquors will increase by no less than 700 percent when the sin tax reform bill is passed.
Congress  already passed the sin tax reform bill in the third reading and final reading. When Senate passes the bill, there will be a bicameral conference committee as the House and Senate versions of the bill are totally different.