Press Release
November 23, 2006


Where are the promised benefits for the health sector under the new tax measures?

Senator Pia S. Cayetano has urged the finance and budget departments to immediately release the funds that were supposed to be earmarked for health services under the Expanded Value Added Tax (E-VAT) law and the amended sin tax law, adding that these funds will substantially augment the budget of the Department of Health (DOH) next year.

Cayetano called for the immediate release of the funds after learning of the government's apparent failure to comply with the so-called "social provisions" of RA 9334 ("An Act Increasing Tax Rates Imposed on Alcohol and Tobacco Products") and RA 9337 (the "Expanded Value Added Tax Law").

Both revenue measures are among the major administration tax measures passed by the 13th Congress in the last two years.

The lady senator said that Section 7(C) of Republic Act 9334 provided that two and a half percent (2.5%) of the incremental revenues from the excise tax on alcohol and tobacco products starting January 2005 shall be remitted to PhilHealth, and another 2.5% to DOH as a trust fund for its disease prevention program.

On the other hand, Section 21 of Republic Act 9337 amends Section 288 of the National Internal Revenue Code and allocates ten percent (10%) of incremental revenues from the E-VAT for health insurance premiums of enrolled indigents.

Cayetano, chairperson of the Senate Committee on Health and Demography, was one of the senators who strongly lobbied for the insertion of said provisions at the height of plenary debates on the two tax measures.

"Assuming that projections are correct that incremental revenues from the amended sin tax law will reach P29.482 billion every year, then a share of just 2.5% already means an additional funding of P737 million to fund the vital programs of the health department," she said.

"The failure to comply with these social provisions defeats the initiative of lawmakers to ensure that funds are directly set aside for marginalized sectors for every tax measure passed by Congress," she stressed.

"I fear that the non-implementation of these provisions will only push people to think that the social provisions were merely inserted to sugarcoat the tax laws that represent an additional burden to them."

She noted that the budget of DOH has remained insufficient amid the increasing costs of providing quality health care to an ever increasing population.

"The inadequacy of resources has compromised some of the department's most crucial programs, thus affecting the state of health in our country."

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