Sen. Pia seeks review of status of Sin Tax Reform Law

Senator Pia S. Cayetano today said the government must explain to the public how it is spending billions of pesos in incremental revenues from higher sin taxes, which were supposed to go to public health services, universal health care, and promote alternative livelihoods to tobacco farmers and workers as mandated by the Sin Tax Reform Act.

A health advocate and one of the main proponents of the law, Cayetano has filed Senate Resolution No. 440, which directs the Congressional Oversight Committee on the Sin Tax Reform Act to conduct an inquiry, in aid of legislation, into the level of compliance with the law's revenue targets and social objectives.

Hailed as a landmark health and revenue measure, the Sin Tax Reform Act was signed as Republic Act 10351 by President Benigno Aquino III on December 20, 2012, and became effective a year ago on January 1, 2013.

"One year after we struggled and succeeded in the passage of the Sin Tax Reform Act, have our people started to benefit from higher sin tax collections as this landmark law had envisioned?" she asked, referring to the law which raised excise taxes on tobacco and alcohol products, with the objective of generating funds for social services and curbing excessive smoking and drinking habits among Filipinos.

"There is an urgency for Congress to undertake this review to ensure that the twin goals of the law are being observed and complied with, namely, to enhance government's tax collections from alcohol and tobacco products, and to allocate substantial funds from sin tax revenues for public health programs," she added.

Cayetano said initial data coming from the Bureau of Internal Revenue (BIR) itself indicate that for the first eleven months of 2013 alone, the agency was already able to exceed its whole-year sin tax revenue target for 2013 under RA 10351. She noted that sin tax collections amounted to P91.6 billion from January to November 2013 alone, which already surpassed the BIR's full-year collection target for 2013 at P85.8 billion.

"Compare P91.6 billion to the BIR's sin tax collections in 2012 at P50.4 billion, then that already represents P41 billion in incremental revenues, or an increase of 81.5 percent. And this still does not include the collections from December 2013," she pointed out.

"But while the higher figures are encouraging, it only shows one-half of the picture. What we would like to see is the other half: How much of these billions in incremental revenues were earmarked and actually allocated for universal health care, government health programs, and to promote economically viable alternatives for tobacco farmers and workers? All of these are mandated by the law."

She said under Section 8 (B) of RA 10351, fifteen percent (15 %) of incremental revenues from excise taxes on tobacco products shall be exclusively used for programs to promote economically viable alternatives for tobacco farmers and workers in tobacco-producing provinces.

The remaining incremental revenues, on the other hand, should be allocated to universal health care under the National Health Insurance Program (NHIP), medical assistance, and the health enhancement facilities program as mandated by Section 8 (C) of the law.

"Until now, there are no rules and regulations governing the earmarking of funds from incremental revenues. And as such, these funds have not been released to the concerned agencies. These are clear delays and violations of the law. The Department of Budget and Management, Bureau of Internal Revenue, and the Department of Finance owe the people and the Congress an explanation where the billions in sin tax collections are going," she concluded.