The sin tax reform measure, which will increase taxes on liquor and tobacco products, is a “win-win situation for everyone,” President Benigno Aquino said.
In an interview with ANC’s Inside Business, Aquino expressed confidence the sin tax bill and the remaining Anti-Money Laundering Act amendment will be passed by Congress before elections next year.
“There’s an estimated, if I’m not mistaken P31 billion increase in revenues from this proposed measure, and it’s earmarked 15 percent or so for the farmers. The rest will go into health services. Now every province, and there are many provinces involved in tobacco cultivation that already have significant amounts of revenues that will accrue to them once this is passed. In effect, everybody should benefit from it,” he said.
The sin tax reform bill is one of the Aquino administration’s priority measures, which has been certified as urgent.
The House of Representatives has already approved the bill, which sets a two-tier system for tobacco products and three-tier system for alcohol products, depending on net retail price. However, the Senate has yet to pass its counterpart measure.
Philip Morris Fortune Tobacco, which dominates the local market, has complained the sin tax measure will result in a 708 percent increase on taxes on low-priced cigarettes in the country.
“Well it’s a sin tax. We’re trying to discourage behavior and I think they are already addressing that in so many other markets that they are engaged it, why should the Philippines be an exemption,” Aquino said.
At the same time, Congress has yet to approve the remaining AMLA amendment, which expands the list of covered institutions, broadens the definition of money laundering and increases the list of predicate crimes. The Financial Action Task Force is hoping the Philippines passes the last remaining AMLA amendment by October.
Aquino considers the sin tax law and the AMLA amendment to be priority measures, even over a proposed measure that will increase the government’s share in mining revenues.
“The sin tax measure is in a mature form already. We’re very close to that, the other is the third law with regards to the Anti-Money Laundering, which is also a priority. In effect, there are so many priorities, they really have to make a firm priority. So the mining, I think can wait a little while, becasue there are the two that are more important than this one, at this point in time,” he said.