The bill calling for an increase in taxes on cigarettes and liquor, seen to bring in additional P34 billion in revenues yearly, stands a good chance of getting approved by Congress when lawmakers reconvene for the third regular sessions beginning July.
“There’s a good chance of it getting passed (by the Senate) and I think we should do pass a ‘sin tax’ reform bill,” Sen. Ralph Recto said, adding that it’s an administration and “we will give it utmost priority.”
The chairman of the Senate ways and means committee noted that the original bill pegged the estimated revenues at P60 billion. But now, it has been brought down to P30 billion to P34 billion.
“That’s a huge drop, from P60 billion to P34 billion. That also means that P60 billion was really a the pie in the sky. Maybe P34 billion is a pie in a sky.
“I do support the increase in sin taxes but it must be in such a way that you do not overburden consumers because it’s not the cigarette or alcohol company that will shoulder it, it’s the consuming public,” he said.
Recto said he’s willing to craft a version for the Senate that would provide a more “realistic” target or figures for the government.
“What is realistic? And what is the best national interest? Do we manufacture more manufacturing jobs? Or do we import these sin products? To me those are the issues. Do we import it or do we manufacture it?
“My job here is to temper (the impact). I could do it realistically, but let’s see what happens. And at the same time, let’s find out from the administration or the DoF (Department of Finance) and the Budget (department), where are we going to spend the money? When we increase taxes we are thinking of why. Why? Where are we going to spend the money? It would be difficult to say that the objective of this measure is to encourage smokers to quite the habit,” he said.
House Bill 5727 was approved by the House of Representatives before Congress adjourned sine die its second regular session last June 6.
The measure is seen to increase government revenues by some P30 billion annually.
Some tobacco farmers’ group have already voiced their strong opposition over the measure, claiming that a 700-percent increase will bring down the prices of low-end cigarettes and it would mean lesser income for them.
Some sectors also warned that the bill will only push the prices of low-cost cigarettes to almost the same rate or price bracket as that of high-end products.
The bill was certified urgent by Malacañang.
The senator, however, refused to provide figures as to what he described as realistic revenue targets, saying that the matter can be determined only after he has conducted hearings on the bill.
“And we will conduct hearings as soon as we resume sessions because officially I do not think it has been officially transmitted to the Senate yet. But we will give it utmost priority. It is an administration measure,” he said.
Recto said he intends to ask DoF officials to explain the “big gap” between tobacco taxes and local and imported cigarette brands.
“Why? That’s what we want to find out. Another thing that we should look at is: would this benefit foreign or local manufacturers. Will we be importing sin? I would rather export sin than import it,” he said.       
Recto added he does not see the tobacco industry folding up due to higher taxes saying that what could be a possible consequence is that of smuggling activities arising from the imposition of higher sin taxes.
But it’s also possible, he said, that there could be an increase in imported products over the locally-produced ones.
“So, who are we protecting here? Are we giving incentives for importers or manufacturers?  That’s the issue,” the senator said, voicing concern that there are many other stakeholders likely to be affected by upward adjustments in sin taxes on cigar and alcohol products.