MANILA, Philippines – Health Secretary Paulyn Ubial made a stand against the House bill seeking to impose a two-tier excise tax structure on cigarettes.

“We have a number of health champions in Senate, and we’re hoping that it will not push through in the Senate,” Ubial said in an interview with Rappler on Tuesday, January 10.

House Bill (HB) 4144 was already approved on 3rd and final reading on December 13, 2016, and transmitted to the Senate a day after.

It threatens to block the full implementation of Republic Act 10351, or the landmark Sin Tax Reform Law of 2012 passed under the Aquino administration.

Under the proposed measure, a pack of cigarettes with a net retail price of P11.50 and below would be taxed P32, while cigarette packs that cost more than P11.50 would be taxed P36.

The current law mandates that a unitary tax rate of P30 be imposed on all cigarette packs – regardless of price – by 2017.

Ubial said she believes most of the members of the Duterte Cabinet support unitary taxation on cigarettes, which she believes will result to a higher tax collection.

“But if worse comes to worst and [HB 4144] passes through Senate, then our last straw would be the President vetoing this particular initiative. But I think most of the members of the Cabinet, particularly those involved in the implementation of the sin tax law, is united in our stand of implementing a unitary taxation,” she added.

According to Ubial, the proposed two-tier tax structure will not only produce less tax, but it also won’t be helpful in reducing the number of smokers in the country.

“If you have a two-tier taxation, then those who are actually affected by the increase in taxes in more expensive brands will just shift to the lower priced cigarettes, so it’s not actually producing more taxes,” she explained.

Stalling sin tax law?

In a recent Rappler Talk interview, Marikina City 2nd District Representative Miro Quimbo said the finance department, which has strongly opposed HB 4144, wants a unitary taxation “because it’s easier to implement.”

“But at the same time the representatives from up north, the Northern Alliance, and the tobacco-producing provinces felt like we need to create that distinction between the high-priced and the low-priced [cigarettes] because they wanted to protect the local farmers,” Quimbo said.

He explained further: “The reason for that is they said that the low-priced cigarettes are the ones that actually consume and buy the local products, so if we actually make it unitary, it’s going to kill the low-priced cigarettes, and only the imported products are going to survive effectively, affecting their own respective areas.”

Quimbo said it’s “not entirely accurate” to say the House is “stalling the sin tax [law] implementation to its fullest” since HB 4144 is “taking a direction that it maintains the two-tier but it’s increasing the tariff.”

“In terms of revenue side, I think it’s been argued that revenue is actually going to be much bigger and at the same time, health-wise, it makes it less affordable for people to buy it. Again the question now is how fast the process was, it’s a pretty controversial issue,” he added.

Health advocates said the House bill was “railroaded,” considering that it hurdled the Lower House just less than two months since it was filed in October.

Proponents of the bill said reverting to a two-tier excise tax structure will “protect the welfare of tobacco farmers,” but Ubial called this just one of the tobacco industry’s excuses.

“Any excuse is resorted by the industry to actually promote their intentions of just increasing or stabilizing the tobacco smokers, because that way, if we have a two-tier system, it’s really not decreasing the smokers, it’s just shifting them to a lower or cheaper cigarette,” she explained.

As a health measure, Ubial said the current sin tax law aims to discourage both young people and the poor from smoking. – Rappler.com