Press Release
November 5, 2012

Transcript of Interview of Senator Franklin M. Drilon

On the sin tax bill

There is one committee report; it has been sponsored on the floor. We will continue with the sponsorship and now respond to questions in the period of interpellation. Thereafter, we will introduce amendments as the committee amendments. It will be submitted on the floor; there will be revisions. We touched based with Senator Recto, and we agreed that this is the process that we will follow. I have also discussed with the Senate President that tomorrow afternoon, we will start the debates on the sin tax bill. Tomorrow afternoon, we will start attending to the committee report and go to the process of amending it at the appropriate time and submit it to the floor.

We will defend the need to increase the taxes. We will defend the fact that primarily this is a health measure more than a finance and tax measure because it is accepted that smoking is a major cause of mortality in the Philippines. It is accepted that as a policy, excise tax is an effective tool of reducing smoking in the country. So, it is along these lines that we will defend the need to increase sin taxes on cigarettes which have lagged behind in terms of the GDP growth of the Philippines.

We will be endorsing a committee report that proposes an increase on both cigarettes and liquors; but on the rates, we will propose amendments. In the same manner that the original report recognized the fact that there will be amendments. In fact, Senator Rector, in his speech, said that.

I have studied the measure and we will make the appropriate amendments at the appropriate time. Wala pang figures.

What I meant was we really needed more revenues for our health sector. The budget of the Department of Health is P54 billion under the 2013 budget, but they really need about P77.4 billion. So, there is a funding gap of P24 billion. Therefore, we have to pass the sin tax bill in order that we can fill the financial gap on the health sector. The government cannot appropriate P77.4 billion because of the deficit level.

That is our intention: to pass the sin tax first (before the budget), so that we will have a better feel of the budget once the sin tax is passed.

At the very least. It is not just P24 billion because, remember, tobacco farmers are entitled, under R.A. 7171, to 15% of the increment. That's why I say at least because if you only say P24 billion, you will not reach the tobacco farmers who are entitled to 15% increment. The increment of whatever is the total sin tax collection.

(Q: You mean you have to approve sin tax bill that at least would raise P24 billion) It only means that the program of Philealth which would cost additional 5.2 million families to be enrolled cannot be achieved. Right now, the budget funds the enrolment 5.2 million families who are in the lowest quintile; the proposal is to add another 5.2 million families, but that won't be possible unless we pass the sin tax. That's about P12.5 billion. There will be no additional enrolments, no additional repair of hospitals, if sin tax is not passed.

What we have today in the 2013 budget for the Philhealth premiums and the DoH budget is P54 billion. What we need is P77.4 billion which will enable us to enroll 5.2 million families more, which will enable us to repair regional hospitals, which will enable us to strengthen our public health programs especially immunization. So, if we don't get additional budget under the sin tax, we would not be able to address the budget gap and we should not be able to deliver the services that the government should deliver.

(Q: You're banking entirely on the sin tax bill to...) That's the major revenue measure in Congress, of course, there are administrative measures being undertaken by the BIR and BOC to increase their collections.

(Q: Won't be enough to support the fund needed for the health sector) The sin tax is the only measure on the floor.

(Q: Can you pass that within the week) I will try to have it passed.

What we are working on as a target is that by January 1, there is a new budget.

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