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MANILA, Philippines -- Health Secretary Enrique Ona took a swipe at tobacco companies as he worried that strong industry lobbying could see the sin tax bill pending in the Senate “watered down.”
Ona said House Bill 5727 had already been watered down when the Lower House approved an amended version of the measure that cut the intended levy by half in the first year of implementation.
The original version of the bill had projected P60.63 billion in revenues from taxing tobacco products in the first year of implementation alone, and a total of P128.48 billion by 2016. However, in the amended version, total revenues came to only P41.51 billion.
Ona raised his concerns even as a study presented before the Senate committee on ways and means said the 708 percent increase in the tax imposed on lower-priced cigarettes envisioned by the House version of the bill would add 1.13 percentage points to the projected inflation rate this year.
The Department of Health is backing the sin tax bill authored by Senator Miriam Defensor-Santiago.
“Our fear is the watering down of the bill. We would want that P60 billion (in the original bill) because that is what we need,” Ona said during the Secretary’s Cup, a monthly discussion on universal healthcare.
He said this money could go “a long way” to finance the Aquino administration’s universal healthcare program and improve health service delivery in the country.
Ona said the DOH needs P565.2 billion until 2016 to finance the government’s universal healthcare program but the administration can only provide P360.8 billion.
“That’s why we need this sin tax,” he said.
He said a former senator had told him that the tobacco industry has the “biggest lobby money” in the country.
When asked if he meant some lawmakers may be receiving bribes from tobacco firms, Ona said: “I cannot say that. Mahirap sabihin ‘yun (That’s hard to say).”
A previous study by the University of Sydney also identified the tobacco industry in the Philippines as the “strongest lobby in Asia.”
A former health official and anti-tobacco activists claim that the industry was even behind the watering down of Republic Act 9211 or the tobacco regulations act when Congress approved without the provision on pictorial health warnings that the DOH was pushing.
The industry is even represented in the inter-agency committee that oversees the implementation of that policy.
Short of categorically saying lobby money is being passed to media, Ona scolded reporters for an alleged news blackout on the sin tax.
“Bakit di niyo nilalabas (Why are you not reporting it)? Is that part of lobbying?,” he asked.
Nevertheless, Ona was optimistic the measure will be approved in the Senate would be approved in the Senate “because the balance is strongly in favor of health.”
The DOH has been pushing for higher taxes on tobacco to bring down consumption and discourage youth from smoking.
The Philippines has the most number of adult and youth smokers aged 13 to 15 years old in Southeast Asia. Cigarette prices here are second lowest in the region, next to Cambodia.
The current sin tax on tobacco is still based on the 1996 retail prices of tobacco products, making smoking accessible even to school age Filipinos.
Meanwhile, in his presentation to the Senate, Dr. Cid Terosa, vice dean of the University of Asia and the Pacific School of Economics, said: “A 708 percent increase on the tax on low-priced cigarettes will add 1.13 percentage points to the projected inflation rate this year and could lead to great losses in household incomes, jobs, and economic output.”
His study also showed a “P2.70 additional output generated in the economy every time cigarette sales go up by P1.00.”
Senator Ralph Recto, ways and means committee chairman, said there would definitely be an increase in sin taxes but added that this will be “based on realistic assumptions to generate (the) right revenues for the health sector.”
During the last hearing of the committee, the Department of Finance’s proposal to raise taxes on alcohol and tobacco irked labor unions, tobacco farmers and workers employed in allied industries because of the economic dislocation they said an “excessive” tax scheme would create.
Also at that hearing were supermarket owners, sari-sari store owners and ambulant vendors.
They claimed at least eight million Filipinos stand to lose their jobs if the sin tax bill is passed.
Terosa warned that an “economic backlash is likely to happen if the Senate will not make a study on the proposed high excise tax well.”