House, Senate ratify Sin Tax bill

MANILA, Philippines — The Senate and the House of Representatives ratified last night the Sin Tax bill, which imposes higher taxes on alcohol, e-cigarettes/vapes and heated tobacco products (HTPs) to help finance the implementation of the Universal Health Care (UHC) law.

The ratification of the revenue measure came on the eve of Congress’ adjournment and hours after the Senate and the House convened the bicameral conference committee to reconcile the conflicting provisions of their respective versions of the bill.

President Duterte is expected to sign the bill into law before the end of the year to make the tax increases effective on Jan. 1.

The measure is expected to raise P24.9 billion in fresh revenues. Lawmakers inserted new provisions exempting some medicines from value-added tax (VAT), including those for diabetes, cholesterol and hypertension, for the first year.

“It’s (projected revenues) never enough – we’re a developing country – but we have to start somewhere,” Sen. Pia Cayetano, who chairs the Senate committee on ways and means, told reporters.

“I think the health advocates would say the rates should be higher. But that is the way how democracy works, that is how the bicameral house is,” Cayetano said.

Her counterpart in the House, Albay Rep. Joey Salceda, described the bill as a “good start,” adding that the final version was better than the one approved by his chamber that raised only P16.3 billion.

The Senate version was supposed to raise over P45 billion.

Under the bill, the specific tax on distilled spirits will be increased from P23.5 to P42 per proof liter with a 22 percent ad valorem tax beginning next year.

The specific tax will be increased to P47 in 2021, P52 in 2022, P57 in 2023, P62 in 2024 and by six percent every year thereafter.

Tax on fermented liquors will be raised from P25.4 to P35 starting next year. The tax will then be increased to P37 in 2021, P39 in 2022, P41 in 2023, P43 in 2024 and by six percent for each succeeding year.

A specific tax of P50 will be imposed on wines beginning 2020, with annual increases of six percent every year thereafter.

For HTPs, the tax would be increased to P25 in 2021, P27.50 in 2022, P30 in 2023, P32.50 in 2024 and by five percent every year thereafter.

For “free base” vapes, the tax will be increased to P45 in 2021, P50 in 2022, P55 in 2023, P60 in 2024, with five percent annual increases for each succeeding year.

Salt-based nicotine vape will be taxed slightly lower at P37 in 2021, P42 in 2022, P47 in 2023 and P52 in 2024, with five annual increases from 2025 onwards.

For 2020 to 2024, 60 percent of the proceeds will go to the implementation of UHC, while 20 percent will be allocated for the Health Facilities Enhancement Program (HFEP) and the remaining 20 percent for anti-poverty and social programs under the Sustainable Development Goals.

By 2025, 80 percent of the collections will go to the UHC and the remainder will be for the HFEP.

Salceda said he expects the enrolled copy of the bill to land on Duterte’s desk next week.

On the second year, VAT for medicines for cancer and tuberculosis as well as mental disorders will be scrapped.

Ban on vapes opposed

Global experts on tobacco control policy have urged lawmakers to reject proposals calling for a total ban on e-cigarettes and other vaping products.

During a hearing by the House of Representatives on proposed measures seeking regulation of e-cigarettes and vapes earlier this week, Andrew da Roza, an addictions psychotherapist from King’s College London, said electronic nicotine delivery system (ENDS) products have been medically proven to reduce harmful effects of tobacco and promote smoking cessation.

Da Roza explained that ENDS could actually provide public health policy a unique opportunity to eliminate cigarettes in a single generation.

Pharmacology professor Konstantinos Farsalinos of the Onassis Cardiac Surgery Center in the University of Patras in Greece made a similar finding.

He presented research findings which showed that a risk-proportionate and realistic regulatory framework would help maximize the use of vapes as an effective harm reduction and smoking cessation strategy for the promotion of public health.

Farsalinos disputed medical reports attributing lung and heart diseases to ENDS.

“It’s hard to determine what caused pulmonary diseases among e-cigarette users since most of these people have also used tobacco or conventional cigarettes for a long period,” he pointed out.

Farsalinos argued that arterial stiffness, which is called “acute effect” of vaping use, is also acquired through caffeine intake.

“E-cigarettes are much less harmful than conventional cigarettes. The harmful effects of cigarettes arise from smoke and e-cigarettes do not produce smoke,” Clive Bates, former director of UK’s anti-smoking organization Action on Smoking and Health, told lawmakers.

The hearing was conducted by the House committees on trade and industry and on health chaired by Valenzuela Rep. Weslie Gatchalian and Quezon Rep. Helen Tan, respectively.

Bates said cigarettes are likely to be at least 20 times as harmful as vapes. – With Edu Punay