House panel OKs higher taxes on sin products

Posted at 05/09/2012 9:48 PM | Updated as of 05/09/2012 9:50 PM

MANILA, Philippines - Voting 46-14, the House Ways and Means Committee swiftly approved House Bill 5727 restructuring the excise tax on alcohol and liquor in the country.

If passed into law by Congerss, the bill could jack up prices by as much as P28 per pack of cigarettes and over P300 per proof liter for liquor.

The bill approved by the House committee on Wednesday morning would also effectively "unfreeze" sin taxes which have been pegged to 1996 levels up to now.

Under the bill, cigarettes priced P11.50 a pack and below will be levied a P12 tax per pack. Cigarettes above P11.50 a pack will be taxed P28.30.

On the other hand, liquor priced less than P90 will be taxed P20 per proof liter. Liquor priced between P90 and P150 will have a tax of P80 per proof liter, while those priced above P150 will be taxed P320 per proof liter.

Ways and Means committee chairman Isidro Ungab said this was reached after consultations with manufacturers. He expects these rates to be the probable mark-up for liquor and tobacco products since manufacturers are expected to pass these on to consumers.

Ungrab noted that the Philippines has the second lowest priced alcohol and cigarettes in the world. One of the objectives of the bill is to discourage the young from consuming "sin" products such as alcohol and cigarettes, he added.

The Department of Finance earlier projected the government will be able to collect P60 billion in revenues in the first year of implementation of the six tax.

However, Ungrab conceded the projected revenues from the sin tax bill will go down.

Davao del Sur Rep. Marc Douglas Cagas moved for the approval of the bill during the committee hearing.

"If this bill pushes through, madidistribute yung kita ng galing sa sin taxes. How can I go against universal health care," he said.

Under the proposed bill, 15% of the projected revenues will go to tobacco farmers, while 85% will be earmarked for universal healthcare in all provinces nationwide.

Minority Leader Danilo Suarez claimed the approval of HB 5727 was railroaded and there was little or no time given to stakeholders to express their views.

Noting government revenues are still down, Zambales Rep. Mitos Magsaysay said instead of sin taxes, there should be better tax collection efforts first. She noted the administration may have been rushing the bill's approval for President Aquino's next State of the Nation Address in July.