Finance chief: sin tax bill shows political will

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The passage of House Bill 5727 at the Lower House signifies the political will of the Aquino administration, says Finance Secretary Cesar Purisima

MANILA, Philippines – The recently passed sin tax reform bill at the House of Representatives is proof of the Aquino government’s political will, stressed the head of the country’s economic managers

Finance Secretary Cesar Purisima, who is accompanying President Aquino in trips to United Kingdom and United States, lauded the historic passing of the Palace-backed House Bill 5727 by almost 300 lawmakers at the Lower House.

HB 5727 makes some cigarette and liquor products more expensive–an effort that has long been languishing at the House for over a decade largely due to intense lobbying by industry players and lawmakers from the tobacco-producing regions.  

“The passage of House Bill 5727 at the Lower House signifies the political will of this administration to institute needed reforms that shall help us achieve macroeconomic stability and fiscal sustainability,” Purisima said in a statement on Thursday, June 7, a day after the House passed the bill.

Previous administrations have tried but failed to get the lawmakers nod on a crucial piece of legislation that will contribute massive revenues for the government collected from those who consume the “sin” products rather than from all tax payers.

President Aquino has certified the sin tax reform bill urgent in May and has dropped other similarly crucial revenue-enhancing measures, including the rationalization of fiscal incentives.

HB 5727, in its original (and ideal) version, was supposed to raise up to P60 billion additional revenues by changing the sin tax system from the current complicated 4-tiered structure, which favors local and low-priced cigarettes, to a unitary one.

As a compromise to break the impasse and move it along at the House, the new, as well as the approved, version imposes a 2-tier structure for cigarettes and 3 for liquor products.

The watered down version also did away with the indexation to inflation, which could have ensured that the base price of the sin products reflected the prevailing prices. This could have increased sin tax collections by another P4.7 billion, according to Finance Undersecretary Gil Beltran.

Nonetheless, the recently passed sin tax will raise an additional P31 billion to P33 billion in its first year of implementation. Of this, 85% will be allocated for universal health care spending and 15% to tobacco farmers.

To enact the reforms, Senate can either pass its own version or adopt the House’s HB 5727. With the recess for Congress looming by end of the week, the lawmakers still need to reconcile their versions in a bicameral conference committee before it is submitted to Malacañang for the President’s signature.

“We call on our dear senators to ensure the passage of HB 5727 into law within the year keeping in mind the welfare of the Filipino people,” Purisima said. –

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