P27B reduction in UHC funding seen with sin tax moratorium on tobacco — party-list

The proposed moratorium on the implementation of the Sin Tax law on tobacco products will result in P27 billion worth of lost funding for the Universal Health Care Law, the Anakalusugan party-list said Thursday.

Anakalusugan party-list Representative Ray Reyes is referring to House Bill 11279 which seeks to postpone the existing 4% increase in tobacco products taxes for 2026 to make way for a 6% increase in tobacco products in 2027 and every two years thereafter.

The same proposed moratorium also provides that on years without a scheduled increase in the rate of tax except for 2026, the President, upon the recommendation of the Secretary of Finance, may increase the tax rate by up to 5% in case the actual national government deficit of the previous year exceeds the programmed deficit by an equivalent of the 2% of the gross domestic product of the previous year.

"The ‘Health Sabotage Bill’ threatens over P27 billion worth of government revenues over the next five years- funds essential for Universal Health Care, building health facilities, hiring medical staff, and other critical health services. Anakalusugan party-list strongly opposes the proposed moratorium on sin taxes, also known as the ‘Health Sabotage Bill.’ Its approval would drastically harm public health, burden the economy, and undermine our progress toward a healthier, more resilient nation,” Anakalusugan said.

The group urged the public to oppose the moratorium on sin taxes, saying the "financial loss would seriously cripple programs aimed at improving public health and welfare.”

Anakalusugan party-list said that projected health costs are set to increase by 18% by 2025, making the proposed moratorium “untenable.”

“Removing or freezing sin taxes will cause a rise in smokers across all demographics. Data from the Department of Health reveals that despite the current tax rates, the number of smokers has increased. Halting tax hikes means lost revenue for the government and rising healthcare costs,” it said.

The party-list also cited studies that claim sin taxes deter smoking and the use of harmful products like traditional tobacco, vape, and heated tobacco, while the proposed moratorium opens the door for 400,000 more smokers by 2030.

“The broader economic toll is alarming. Smoking results in P414 billion in lost productivity and disease treatment annually. This represents the untapped potential of our workforce, which is crucial for the Philippines' global competitiveness,” the group said.

“Failure to address these avoidable losses jeopardizes the nation's health, economy, and resilience. Public health is non-negotiable,” Anakalusugan added.

In a separate statement, House ways and means panel chairperson and Albay Rep. Joey Salceda said the Finance department should first weigh in on the matter.

“My professional opinion as an economist is that there has been a shift from licit to illicit cigarettes due to the large differential in prices (partly due to the tax), and a shift to vapes, which did not necessarily induce quitting cigarettes. [And so] we will allow the Department of Finance to give its formal position, as the implementor of the country’s tax policy, before proceeding,” Salceda said.

The solon said the P129 billion of government revenues lost over the past three years from what appears to be increased illicit trade in untaxed cigarettes is not a negligible amount.

Further, Salceda said the National Nutrition Survey showed a 5% increase in the incidence of smoking in the Philippines from 2021 to 2023, due to increased vaping and a slight rise in incidence of smoking among adults.

“This does not square with the sharp reduction in revenues from cigarettes,” Salceda said.
—RF, GMA Integrated News