World Bank lauds sin tax law as ‘win-win’ legislation for PHL

The World Bank last week hailed the Sin Tax law as a “win-win” piece of legislation that not only allows the government to increase its revenues, but also curb the number of deaths from tobacco-related diseases.

Jim Brumby, World Bank Sector Manager for Poverty Reduction and Economic Management, lauded the Philippine government for passing the law, saying it reflects the country’s commitment in the global fight against tobacco.

“I would like to acknowledge the monumental success of the Philippine government in pushing through with the sin tax reform. The workshop was held here in the Philippines in large part because of the interest that countries in the region— and beyond— have shown in [initiating anti-tobacco reforms],” he said at the East Asia and Pacific Regional workshop on Tobacco and Alcohol Tax Reform held at Sofitel Philippine Plaza.

The regional workshop, which was organized with the support of the World Health Organization, the Asian Development Bank, the Campaign for Tobacco Free Kids, the Southeast Asia Tobacco Control Alliance, and the International Union against Tuberculosis and Lung Disease, was attended by government officials and civil society representatives from 10 Asia-Pacific countries.

Rate hikes

Despite the stricter regulation of tobacco in several countries, Brumby said smoking continues to become a global menace, killing 5.4 million persons worldwide every year.

"Unless urgent action is taken, the annual death toll can rise to more than 8 million by 2030,” he said.

Republic Act 10351 or the Sin Tax Reform Law was signed by President Benigno Aquino III on Dec. 20, 2012.

Beginning Jan. 1, 2013, cigarette packs selling at a net retail price of P11.50 were slapped with a P12 excise tax and those selling for over P11.50 a new rate of P25.

The rates will go up to a P30 unitary excise tax in 2017 and will have a 4 percent yearly increase thereafter.

Alcohol products, meanwhile, will have a tax of P20 plus 15 percent of net retail price per proof in 2013 and 2014, P20 plus 20 percent of net retail price per proof in 2015.

By 2016, the tax rate of P20 will increase by 4 percent a year plus the 20 percent net retail price per proof.

The government expects to collect P33 billion in additional revenues because of the sin tax law. The money will be used to pay for the Universal Health Care Program and to support tobacco farmers and the industry.

Universal health care funding

Department of Health (DOH) Secretary Enrique Ona said during the forum that the agency’s budget was able to grow by 57.9 percent in 2014 because of the taxes collected during the first year of implementation of the sin tax law.

“The future looks bright for our program of Kalusugang Pangkalahatan or universal health care. The expanded fiscal space for health has already allowed us to enroll an additional 9.5 million families for 2014 to the National Health Insurance Program,” he said.

Finance Department Undersecretary Jeremias Paul, meanwhile, said that although the sin tax law has been in place for a little over a year, other countries can already learn lessons from the Philippine experience in passing and implementing the landmark legislation.

“Even while the Philippines’ sin tax law was passed in a specific context, common lessons can be drawn by other governments in the region hoping to adopt this kind of policy. One of these lessons is that it is crucial to aim high, in order to reap the maximum possible gains for health and fiscal space,” he said. — BM, GMA News