NEDA backs further hike in ‘sin taxes’

by Czeriza Valencia (The Philippine Star), May 23, 2019

MANILA, Philippines — The National Economic and Development Authority (NEDA) supports the proposal to further increase the excise tax imposed on tobacco and alcohol products to fund the full implementation of the Universal Health Care (UHC) program.

“NEDA is supportive (of this proposal),”Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia told reporters yesterday.

“The Universal Health Care program needs funding and I think sin taxes are good sources of revenue for the funding requirements,” he said.

The Department of Finance (DOF) and the Department of Health (DOH) are pushing for the passage of Senate Bill 1599 filed by Sen. Manny Pacquiao seeking to increase the current uniform excise tax rate on cigarettes and other tobacco products from P35 to P60 per pack in the first year of its implementation and an additional nine percent per year thereafter.

Aside from tobacco products, the DOF and DOH are also pushing for the increase in excise taxes on alcohol to at least P40 per liter and impose a unitary tax system on fermented liquors.

Pernia said that even if the bill is passed into law, this is unlikely to stoke inflation anew as sin tax burden has traditionally not been a large contributor to inflation growth.

“Sin taxes haven’t been a major contributory factor to inflation,” he said, noting the current inflationary pressures are still caused by the rise in food prices.

Finance Secretary Carlos Dominguez said passing Pacquiao’s bill would close the funding gap of P426 billion for the UHC over the next five years, paving the way for its full implementation.

President Duterte signed the UHC program into law last February to promote good health among Filipinos and improve living standards nationwide.

The law expanding the provision of services under the country’s universal healthcare program would require as much as P1.44 trillion from 2020 to 2024.

It will be difficult to have the bill passed within the 17th Congress as it will be in session only until June 7 before its adjournment on June 8 to make way for the next Congress that will open on July 22.