Press Release
November 20, 2012


The Senate today approved on third and final reading the bill seeking to generate P40 billion in incremental revenues from increased taxes on alcohol and tobacco products, in an effort to boost government healthcare programs, as well as to address the high prevalence of smoking in the country, announced Senate Ways and Means acting chairman Franklin M. Drilon.

Senate Bill No. 3299 otherwise known as "an Act Restructuring the Excise Tax on Alcohol and Tobacco Products" was adopted with 15 affirmative votes, two negative votes, and zero abstention.

"The passage of this bill is monumental in the history of this chamber. Once again, amidst the differences in our views, we have proven that we care more about saving lives than generating revenues; and that we remain true to serving the nation above personal interest ," said Drilon who went through tedious debates on the proposed measure.

Drilon likewise lauded his colleagues for seeing the rationale behind the passage of the bill. "I praise our colleagues for voting swiftly on this important measure, because any delay will only put to further damage the lives of more than 17 million Filipinos, four million of which are youths, who now are cigarette smokers."

"I also acknowledge the support of the President throughout the passage of this bill; as well as for certifying the health measure as urgent. Without him, we would not have gone this far," he added.

Under the bill, the government is expected to generate P40 billion in additional revenues by increasing the taxes on sin products such as cigarettes and alcoholic beverages. Of the amount, P24 billion will come from increased taxes on tobacco, while P16 billion will be generated from taxes on fermented liquor and distilled spirits depending on its historical burden sharing.

The bill also mandates for a unitary tax rate for all kinds of cigarettes by the start of the fifth year of its implementation. On the other hand, the bill proposes a two-tier system for alcoholic beverages.

"The additional revenues will primarily go to advancing the cause of the health sector that, in particular, will be used for the enrolment of additional 5.2 million poorest Filipino families in Philhealth," said Drilon.

The sin tax reform bill, he emphasized, is a health measure to address the high case of deaths and illnesses due to smoking estimated at 80,000 Filipinos deaths per year, or 10 people per hour.

Also, smoking, per the Department of Health data, costs the government an estimated amount of P218 billion to P416 billion in annual health care expenses and productivity losses, noted Drilon.

Meanwhile, Drilon underscored the benefits of the bill to the farmers. Of the amount to be generated, 15 percent of it, or around P6 billion, will go to tobacco farmers to help improve their craft and to assist them in switching to a different crop that yields higher income. The P6 billion will be in addition to P4 billion that, at present, is allotted annually to tobacco farmers, explained Drilon.

"The bill will double the safety net being provided under the law to help them augment their income and to support alternative livelihoods for the farmers," stressed Drilon.

The safety net, added Drilon, can be used to assist the farmers who want to shift from planting tobacco to farming other more profitable crops like corn, garlic, tomato and pepper.

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