PNoy signs sin tax bill into law, to take effect Jan. 1, 2013

President Benigno Aquino III, in what he described as his “early Christmas gift” to the Filipino people, signed into law on Thursday the controversial Sin Tax Reform bill, which seeks to increase excise taxes on alcohol and tobacco products. “Sa araw pong ito, nilagdaan natin, sa wakas—ulitin ko lang po, sa wakas—ang isang batas na magsisilbing maagang pamasko sa milyun-milyong Pilipinong masasaklaw sa abot-kamay nang Universal Health Care program,” Aquino said. Aquino said the revenue from the new law, formally known as Republic Act 10351 or the new Sin Tax Reform Law of 2012,  will go into the construction of clinics and hospitals, in addition to discouraging Filipinos, especially the youth, from smoking and drinking. “[Ang mga] Pilipino ay makikinabang sa mga bagong klinika at ospital na mapopondohan at maipapatayo; mga Pilipinong maililihis sa bisyo ng paninigarilyo at labis na pag-inom. Batas na po ang ipinaglaban nating Sin Tax Reform Act,” he said. The law, which is expected to generate P33.96 billion in additional revenue, has been called a health measure by the administration. Aquino certified the bill as urgent, allowing it to sail past second and third reading in the Senate amidst a powerful tobacco lobby. Safety nets In his speech after signing the law, Aquino also took time to reassure tobacco farmers of the safety nets that will guarantee their income and benefits, noting that part of the resistance against the law is the possible repercussions on tobacco farmers. “Lilinawin ko rin lang po sa mga magsasakang nabulungan ng agam-agam ng ilang sektor na kontra sa batas na ito: Wala po kayong dapat ikabahala,” Aquino said. “Ang benepisyong natatanggap ninyo dati ay hindi maglalaho; ang totoo nga po, lalaki pa iyan, habang tumitibay naman ang suporta sa inyo ng pamahalaan sa pamamagitan ng iba pang ayuda,” he added. Of the amount set to be collected, 15 percent will go to tobacco farmers’ safety nets, while 85 percent will go towards the health budget. Additionally, of the 85 percent allocation for health, 80 percent will be funneled towards the government’s Universal Health Care Program, and 20 percent will go towards health facilities enhancements. Aquino also took the time to thank lawmakers who have moved toward the crafting of the bill, saying that with enough cooperation, reforms such as the sin tax bill can be achieved for the majority of Filipinos. “Pero gaya po ng paulit-ulit nating napatunayan: Walang imposible sa Pilipinong sumasagwan sa iisang direksyon, nasa tamang lugar ang puso, at handang manindigan para sa kanyang mga prinsipyo,” he said. Effective Jan. 1, 2013 The Bureau of Internal Revenue (BIR) announced that the new taxation system will come in effect by the start of 2013. “The law will be effectively immediately upon publication. We expect it to be published this December. So by January 1, 2013, the act will be effective and the rate of taxes will be implemented,“ BIR Commissioner Kim S. Jacinto-Henares said. “We will also be coming up with a revenue regulation and it will be published before the end of the year,” she added. Henares also explained the scheme for the gradual shift to unitary taxation, saying that in a matter of years a uniform four-percent additional tax will be collected. “[For] distilled spirits, [in] the first two years its specific tax, I believe, 20 pesos plus 15 percent of net retail price per proof—that’s [for] 2013, 2014. Come January 1, 2015, it is 20 pesos per proof liter plus 20 percent of net retail price per proof. Then, in 2016, the 20 pesos per specific portion, ‘yun ‘yung increase nang increase ng four percent per annum plus ‘yung 20 percent na net retail price,” she said. “And [for] the cigarettes, you have a specific rate and it will become unitary in January 1, 2017. Then, after that, every year it will go up by four percent. Also with beer it’s the same thing. It will become unitary [by] January 1, 2017 and then it will go up four percent every year thereafter,” Henares added. The unitary tax of four percent will go on indefinitely, unless the law is amended, Henares said. “There’s no sunset provision for the increase of four percent. It’s four percent per annum forever or until the law is amended. It can go up, down when the law is amended,” she also said. Most important legislation Health advocates that have long fought for the bill have expressed joy at the passage of the bill, calling it the most important piece of health legislation passed by any government. “The most important health law that we’ve ever passed, in terms of numbers saved per year, this is far greater than even the Reproductive Health Bill,” Dr. Antonio Dans of the UP College of Medicine told GMA News Online in a phone interview. Dans, who has fought against the watered down version of the bill initially presented in the Senate, said that as many as 60 thousand smoking-related deaths can be prevented every year thanks to the Sin Tax Reform law. “We’re really very happy. ‘Yung provisions we got everything, hook, line, sinker, rod, boat and fisherman,” Dans said, pointing to the structure of the law that levels the playing field and effectively increases the price of the lower brands, thereby discouraging smokers from merely transferring to a cheaper brand once taxation catches up. “The 50 medical societies and institutions who have signed a manifesto in support of the bill are all very happy with the new law,” Dans said. — KBK, GMA News