AHEAD of the adjournment of Congress sine die, the House of Representatives adopted the Senate version of the bill amending taxes on tobacco.
Senate Bill 2233 was sent to the House after making some amendments.
Prior to the approval, some House members particularly those from the Northern region expressed objection to the Senate version especially on the sharing of tax proceeds.
Under the approved version, the excise tax for every cigarette pack will increase from P45 to P60 for the next four years.
Once signed into law, the scheduled increase would be as follows: P45 per pack effective Jan. 1, 2020 until Dec. 31, 2020; P50 in Jan. 2021; P55 in Jan. 2022; and P60 effective Jan. 1, 2023. Thereafter, the rate automatically increases by 5% annually.
In addition, an excise tax of P10 per pack of 20 units will be imposed on heated tobacco products, while vapor products will have a P10 excise tax for every 10 milliliters starting Jan. 1, 2020. These rates will increase by 5 percent annually beginning Jan. 2021.
According to the Department of Finance (DoF), the increase on sin taxes will help fill in the P40 billion funding gap for the implementation of the Universal Health Care (UHC) law.
Under UHC law, which was signed into law last February, all Filipinos are automatically enrolled in the National Health Insurance Program and prescribes complimentary reforms in the country’s health care system.
Aside from giving all Filipinos health insurance, the UHC program also seeks to create more barangay health stations that would serve as primary care units and deploy more doctors and other health service staff.
“With the approval by both the Senate and the House of Representatives of the bill seeking higher tobacco excise taxes, we have come one step closer to giving the government more elbow room to plug the funding gap for the UHC program that aims to provide all Filipinos with affordable and quality health care,” Senator Sonny Angara, chairman of the Senate committee on ways and means.
The Department of Health earlier said it would need P257 billion for the first year of implementation of the law.
For 2020, the government can cover the cost of the UHC program from its current funding sources from the national budget, the Philippine Charity Sweepstakes Office and the Philippine Amusement and Gaming Corporation.
However, the Department of Finance warned the UHC program will be left with a funding shortfall of around P62 billion without the sin tax reform.