THIS week is crucial for House Bill 5727, the measure which seeks to reform the excise tax imposed on tobacco and alcohol products, or the so-called “sin tax”.
The bill is being defended on the Hose plenary hall by Rep. Isidro T. Ungab of Davao City and Cavite’s Rep. Emilio Abaya, co-sponsors of the measure, which seeks to reform the sin tax system in order to increase revenue of the government by P60 billion a year.
The expected annual revenue however has been reduced to only P33 billion after Ungab and Abaya acceded to some changes introduced by fellow lawmakers when the bill was still being deliberated upon in the House Committee on Ways and Means, headed by Ungab.
In an interpellation of Ungab ast week, Rep. Rufus Rodriguez of Cagayan de Oro City said a 700-percent hike in the excise tax for tobacco products will result in lower revenues and lower production of local manufacturers. If these will happen, he said there will be lesser need or demand for raw materials for tobacco.
“This bill will like them (tobacco farmers) to shift to palay, corn or tomato. They will lose a lot of money if they will shift to these crops because tobacco is 400 percent more profitable than palay, corn and tobacco. That is the percentage,” he said.
He cited that in 2011, the price of tobacco was P66.89 per kilo. On the other hand, the price of palay last year was P15.24 per kilo, corn P12 per kilo, and tomato P13.57 per kilo.
However, Ungab said HB 5727 provides safety nets for farmers. He cited the bill provides it will give back 15% of the proceeds to the tobacco farmers. Assuming that the measure would raise P26.8 billion revenue for the government, P4.03 billion will go back to the farmers as safety net according to him.
“The manner of distribution or the procedure we have to approve or the implementing rules will provide that. However, let me emphasize that the farmers here will be taken into consideration. Aside from the 15%, we also again cite the benefits they will receive,” he said.
Ungab said the 2012 General Appropriations Act provides for an allocation to tobacco farmers of P4.731 billion as their share in the excise tax pursuant to Republic Act 7171 (Virginia Tobacco) while their allocation pursuant to RA 8240 (Burley and Native Tobacco) is P1.117 billion.
“These amounts are intended for farmers and among the plans that this 15% will be allocated to are: Programs that will provide inputs, training and other support for tobacco farmers who shifted to production of agricultural products other than tobacco; Programs that will provide financial support for tobacco farmers who will be displaced or who will voluntarily cease to produce tobacco; and Cooperative programs to assist tobacco farmers in planting alternative crops or implementing other livelihood projects,” said Ungab.
He explained that the first and foremost objective of the bill concerns the health of Filipinos. “We all know that the Philippines is one of the top smokers in the world. The figures will show that 30 percent of the Philippine population are smokers and even started to smoke at the age of 10 years old. We want to have a healthy nation, we want to have a healthy Philippines. That is precisely the reason for passing this measure, the sanctuary objective, which is to curb the habit of smoking,” he said.
Ungab also said that prices of cigarettes are very low in the Philippines, in fact they are among the lowest in the world. “For example, a leading brand costing here about P30 to P35 per pack is priced P300 in Hong Kong and P364 in Singapore when converted to peso.”
He cited for 2011, the Philippines was able to collect excise taxes from cigarettes in the amount of P25 billion but figures from the DOH indicate the expenditures for smoking-related expenses is P177 billion. “We are practically spending a lot for smoking-related expenditures, whereas ung bumabalik sa atin maliit masyado.”
Over the years, Ungab noted that the excise tax as a percentage of GDP has been falling year after year. “For the past 10 years, for the past 15 years, it has been going down and that’s very clear. In other words, the present system of taxation is not effective in addressing or curbing the habit of smoking, which we all know is bad to the health of our people. We all know that this can kill our young Filipinos. We all know that batang-bata pa sinusunog na ang kanilang mga baga.”
