More lawmakers oppose higher sin taxes

MANILA, Philippines - More members of the House of Representatives opposed yesterday a bill that would substantially increase excise taxes on cigarettes, liquor, and other tobacco and alcohol products.

Congressmen belonging to the Nationalist People’s Coalition (NPC) bloc, led by Mark Mendoza of Batangas and Rex Gatchalian of Valenzuela City, joined their colleagues from Northern Luzon in opposing Bill 5727, authored by Cavite Rep. Joseph Emilio Abaya of the ruling Liberal Party.

The ruling party and NPC, which is identified with San Miguel Corp. boss Eduardo Cojuangco Jr., are partners in the House majority coalition that supports the Aquino administration.

Mendoza said Abaya and other proponents of higher cigarette and liquor taxes have not addressed NPC’s concerns that their proposal could kill the local alcohol and tobacco industries and render tens of thousands of workers jobless.

He said the country cannot afford to have more jobless people especially considering the result of a recent survey showing an increase in unemployment numbers.

Aside from the NPC bloc, Minority Leader Danilo Suarez has promised the support of his opposition group to the campaign to kill the Abaya bill.

Ironically, Suarez was in the past in favor of increasing cigarette and liquor taxes.

Northern Luzon congressmen grouped under the Northern Alliance are naturally against higher taxes since many of their constituents are tobacco farmers.

Malacañang, the Department of Finance (DOF) and the Department of Health are supporting the Abaya bill, which the government hopes would bring in at least P60 billion in additional taxes from the so-called “sin” products.  

Health Secretary Enrique Ona has told the House ways and means committee that the Abaya proposal is also a health measure as it seeks to discourage people from smoking and drinking.

If this goal is achieved, he said the government would spend less in terms of expenses for smoking- and drinking-related ailments.

Industry players have disputed the projection that the bill could bring in at least P60 billion in additional taxes.

Olivia Limpe-Aw, president of the Distilled Spirits Association of the Philippines, Inc. (DSAP), said the government is “shooting itself in the foot” in pushing for the measure, since it could kill the local tobacco and alcohol industries.

She said the bill would give relief to imported brands while taxing out of the market local products from which the government intends to mainly collect taxes.

She described Bill 5727 as regressive “as it intends to penalize local brands with 1,000-percent increase in tax on the third year, while imported brands will enjoy a tax decrease of more than 1,500 percent.”

She said by the third year, the measure would slap local distilled spirits with an excise tax of P150 per proof liter, or more than 10 times the current P14.68.

On the other hand, imported premium brands would be levied only P42.00 per proof liter, or more than 15 times less than the current P634.90, she said.

The ways and means committee chaired by another Liberal Party member, Davao City Rep. Isidro Ungab, is rushing consideration of Bill 5727, which is among President Aquino’s priority legislative measures.

In pushing for the bill, the DOF said the local cigarette and liquor industries have long enjoyed protection since the current law was enacted in 1996 and taxes have not been adjusted since then.