Press Release
December 10, 2012

Transcript of Interview of Senator Franklin M. Drilon
Monday, December 10, 2012

On the sin tax bill

We were able to reconcile all the disagreeing provisions between the House and the Senate, and tomorrow, we will sign formally the bicameral conference committee report. This is a breakthrough. This is a reform measure that this President has pushed for and which we will have after he signs the bill into law. We are thankful to our colleagues in the Senate and in the House for their cooperation in having this reform measure passed.

The total for first year for cigarette is P23.4 billion in incremental revenue and for the alcohol, it's P10.56 billion for a total of P33.96 billion for year 1. Note that this is lower than the Senate version of P39.5 billion. In terms of financial ratios, the cigarettes, in 2013, will bear 69% of the incremental cost against alcohol of 31%. But this will gradually go down so that in 2015, it becomes 66-44 percent ratio, in 2016, it will become 65-35 percent, and in 2017, it will become 64-36 percent.

Let me emphasize, however, that insofar as the financial burden on the cigarette is concerned, we were able to achieve the Senate version. The Senate version imposed a P23.55B for cigarettes on year one, 2013. What we came out is P23.4B, so that the financial burden in cigarette is lower than the financial burden that we approved in bicam.

I am satisfied with the results of the bicam. What is important is we were able to address all the concerns of various sectors.

Insofar as the earmarking is concerned, we have agreed on the following--after deducting the allocations under RA 7171 and RA 8240, 80% of the remaining balance of the incremental revenue shall be allocated for the Universal Healthcare under the National Insurance Program: the attainment of the Millennium Development Goals and health awareness campaign; 20% shall be allocated nationwide based on political and district subdivision for medical assistance and health enhancement facilities program. The annual requirement of which shall be determined by the DOH.

(Q: How much is 205?) We could not figure that out because you have to deduct what is under RA 7171 and RA 8240.

(Q: On SJPE's proposal?) We accepted the Enrile amendment insofar as the--we accepted with slight modification the proposal on Section 8 which is the amendment which will strengthen anti-smuggling provision of the law. So we had agreed on this with some modification that it will apply only to cigarette and distilled spirit but not on fermented liquor because that is where the smuggling--Insofar as the other provision which are on the 15% local content, we have accepted that subject to colatilla that it shall be subject--the provision will read as follow as amended: the total volume of cigarette in the country, any manufacturer of tobacco products must source at least 15% of its tobacco leaf raw material supply locally subject to adjustments based on international treaty commitments.

(Q: If the provision will not violate an international treaty?) With the phrase subject to international treat commitments, it will read that it stands scrutiny.

This is how we came out because there are objections from the House on the very specific allocation per local hospitals because the needs are not the same, so the provision is more general: universal healthcare (UHC) under the national health insurance program, MGDs, health care awareness program. There was no specific per district hospital like Senator Recto wanted. Nevertheless, 80% allotted for UHC, it will improve health facilities.

Insofar as the Recto amendment, this is what was agreed upon. No specific amounts, just percentage.

The amendment recognized the continued validity of RAs 7171 and 8240 insofar as the share of tobacco producing provinces in the excise tax.

We will submit it for ratification tomorrow afternoon. We will sign the formal bicam report tomorrow morning.

For year 1 (2013), P33.96B; year 2, P42.86B; year 3, P50.63B; year 4, P56.86B; and year 5, P64.1B.

We hope that he (PNoy) can sign it before Christmas.

It is the most difficult six weeks of my being a member of the Senate. This is one of the most difficult periods in terms of--both on the national budget, now the sintax. I started working on this since we came back in November. We do hope that we should be able to serve our country in terms of a better healthcare program. This is a very relevant bill that we have passed. Apart from this, we have the GCG law which addressed the abuses in the GOCCs and harness them to be better partners in the government; we also reset the ARMM election which is very contentious.

(Q: Will he remain as the chair of the Ways and Means Committee) I am just acting now (as Committee of Ways and Means chair). When they would me fire is matter for the body to decide.

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