Business groups back full implementation of sin tax law

MANILA, Philippines - Business groups in the country said yesterday the full implementation of the sin tax law is an important catalyst in reaching the government’s revenue and health targets in the coming years.

Local business groups and the joint foreign chambers said yesterday they support the Department of Finance’s position to fully implement the Sin Tax Reform Act or RA 10351 passed in 2012, which includes a portion mandating the Congressional Oversight Committee to review the impact of the tax rates beginning the third quarter of 2016.

“We, therefore, call on our lawmakers to allow the sin tax law to run its course. We believe that RA 10351 was carefully and properly designed to meet the desired national targets and has undergone proper consultations and thorough deliberations with key stakeholders,” the groups said.

“It is a good and sufficient law that would lead the government to attain its health and revenue goals,” they added.

The business groups said the original objectives set forth by the law were meant to enhance the government’s health goals and strengthen its tax administration efforts.

Since the adjustment of excise tax rates for “sin” products in 2013 along with other reforms incorporated within RA 10351, the group said they have noted a reduction in smoking prevalence as well as a significant increase in government revenues which have supported various health projects and farmers’ livelihood programs.

“The scheduled unification of excise tax rates in 2017, on the other hand, would help simplify tax administration, optimize revenue collection, and reduce the system’s vulnerability to tax evasion and corruption,” the groups said.

However, there is an aggressive push in Congress to amend Section 145 (C) of the National Internal Revenue Code of 1997, as amended by RA 10351, for the purposes of preventing the scheduled shift to a unitary tax for cigarettes packed by machine in January 2017.

This is embodied in House Bill 4144 which proposes to retain the two-tiered system and to increase the excise tax rates for both the lower and higher brackets to P32 per pack and P36 per pack, respectively.

The business groups said proponents of this legislative measure claim their intent is to protect the welfare of the local tobacco farmers.

“However, the lack of proper consultation with stakeholders, including the local tobacco farmers themselves, and the absence of an impact assessment study validating the need for such amendments leave much room for concern and doubt,” they said.