Pia: Higher tax on vices not being reinvested on people's health

Smokers and non-smokers, drinkers and non-drinkers, unite!

The higher "Sin Tax" levied on cigarettes and alcoholic drinks since 2005 is not being reinvested for the government's health promotion and insurance programs as mandated by law, Senator Pia S. Cayetano said today.

"I think it's a bigger 'sin' on the part of the Department of Finance not to remit these collections to health services because it's specified clearly in the law," added the lawmaker, referring to Republic Act 9334 ("An Act Increasing the Excise Tax Rates imposed on Alcohol and Tobacco Products"), which was one the first tax measures passed by the 13th Congress.

Section 24, she explained, mandates that the Department of Health (DOH) and Philhealth (Philippine Health Insurance Corporation), should each receive 2.5 percent of the annual incremental revenues from the new Sin Tax Law.

"But the DOH has been complaining to me that not a single centavo has been remitted to them ever since the law was passed. So where does the money go?" she asked.

She noted that in 2005 alone, P52 million should have gone each to the DOH and Philhealth�or a total of P104 million for public health services. The figures are based on the P2.094-billion incremental revenues from the new sin taxes in 2005, the first year of implementation of RA 9334.

"If we factor in incremental revenues in 2006 and 2007, then we could be talking of at least P300 million that should have been spent on public health programs and to expand universal coverage of Philhealth�especially for the unemployed and informal sector workers.

"The purpose of this earmarking provision is to give additional funding for the DOH to pursue its health promotions program, because the latter amounted to only P42 million in 2007, which is only .03% of total health expenditures in that year.

"Taxpayers have reason to be outraged. It doesn't matter whether you smoke and drink or not. The tax collected from you by the government should serve its mandated social purpose."

She added that the unremitted funds from health could be much bigger if the social earmarking provision of the Expanded Value Added Tax (EVAT) Law or RA 9337 is also factored in.

Section 21 (D) of RA 9337 provides that 50 percent of the Local Government Units' share from incremental revenues of the E-VAT should go to: school building construction (15%), Philhealth coverage expansion (10%), environmental conservation (15%) and agricultural modernization (10%).

She has been asking the DOF to report how much had been remitted so far to the LGUs under this provision, but the latter has not yet provided any data.

Cayetano was the only majority senator who stood against the E-VAT and Sin Tax bills in the last Congress and fought for the inclusion of social earmarking provisions in these measures.