DOH: Sin tax revenue could boost universal health care program budget by 43%

The Department of Health (DOH) could boost the allocated budget for its universal health care program by more than 40 percent through the funds collected from the sin tax. Health Secretary Enrique Ona said the revenues could finance the DOH's Kalusugang Pangkalahatan program for the period 2013-2016. “The restructuring of excise taxes for tobacco and alcohol will ensure financial sustainability of the universal health care,” Ona said Thursday during a seminar on sin tax reform at Traders’ Hotel, Manila. “At the same time it could curb the number of Filipinos, especially among the poor and the young, who are smoking and drinking excessively,” he added. The amended sin tax reform – its House version was passed in June – suggests projected incremental revenues could reach P154.56 billion by 2016 (P31.35 billion in 2013, P39.02 billion in 2014, P42.68 billion in 2015 and P41.51 billion in 2016). If applied to the universal health care program, the sin tax revenues would boost the government budget for Kalusugang Pangkalahatan by 43 percent, the figures show. The current budget for the program is P360.8 billion for the period, or 64 percent of the DOH's target fund of P565.2 billion. House Bill 5727, filed by Cavite representative Joseph Abaya, was “watered down” by the House to generate P30 billion in its first year from an original P60.63 billion, Ona said. Where will sin tax revenues go? The Health chief said the universal health care program aims to expand membership and benefits in the Philippine Health Insurance Corp. (PhilHealth); rehabilitate and modernize hospitals and other health facilities; and strengthen the existing public health services to attain the country's health-related Millennium Development Goals (MDG), which aim to reduce infant, child and maternal morbidity and mortality. For one, Ona said the sin tax could finance the PhilHealth insurance, which he said currently covers only 30 to 40 percent of poor families. “PhilHealth claims that 85 percent should now be enrolled in PhilHealth. But if you go to government hospitals and ask these patients, the figure we get is 30 to 40 percent at the most,” Ona said. Thus, the sin tax could help boost the coverage of the insurance program to as much as 10.9 million poor families, from 5.2 million covered so far. The funds could also expand PhilHealth catastrophic benefits to 30 percent of total cost from the current 10 percent, he noted. The amount could also hire an additional 10,000 doctors, 50,000 nurses, dentists and midwives for far-flung municipalities and hospitals. It could also finance the deployment of 100,000 community health teams, Ona added. The incremental funds could finance the establishment and modernization of hospitals, such as “the establishment of seven centers for specialty services, such as heart, oncology and trauma centers, in strategically located regional hospitals nationwide,” Ona said. “More than 50 percent of our district hospitals don’t even have an operating room and yet we call them hospitals,” he noted. Unitary sin tax The sin tax reform aims to implement a unitary taxing system on alcohol and cigarettes from the current multi-tier system. The multi-tier system – pegged at pre-1996 price levels – makes alcohol and cigarettes cheaper in the Philippines. The amended Abaya bill seeks to increase the price per pack of cigarettes costing P11.50 to P23.50 during the first year of its implementation. Tobacco products costing P11.50 and above, meanwhile, will be sold for P31.80. According to the DOH, this means a stick of Marlboro cigarette could cost P3.04 a stick from the current P2.13; Hope at P2.93 from P1.77; Fortune at P1.59 from P1.07; Champion at P2.76 from P1.33; and Philip Morris at P2.91 from P2.00 a stick. The Senate is currently tackling their version of sin tax reform – SB 2763 and 2764 by Sen. Panfilo Lacson and SB 3249 and 2998 by Sen. Miriam Defensor-Santiago. The bills call for a unitary system of taxation on alcohol and cigarettes. In the Lacson bill, cigarettes valued at P6.50 and below are taxed P2.47 per pack (if packed by hand) and P8 per pack (if packed by machine). Cigarettes valued at more than P6.50 are taxed P14 per pack. Liquor is taxed based on alcohol content – P30 to P150 per proof liter for spirits with 45 percent alcohol; P150 with more than 45 percent alcohol; P300 tax for champagnes and other sparking wine regardless of proof; P50 for other wines; and P21.52 per liter for fermented liquor. For Santiago’s bill, cigarettes packed by hand are taxed P14 per pack, while those packed by machine are taxed P14 for those priced at P10 and below and P28.30 per pack for those priced at more than P10. Liquor is taxed according to alcohol content – P42 to P150 per proof liter for spirits with 45 percent alcohol; P150 to P317 for those with more than 45 percent alcohol; P300 for champagne regardless of proof; P50 for other wine; and P25 per liter for fermented liquor. — BM, GMA News