The country’s finance chief said the government may fall short of generating the funds needed to bridge the funding gap for the Universal Health Care (UHC) program, as the estimated revenue in the ratified “sin tax” measure is lower than the projected amount under the Department of Finance’s (DOF) original proposal.
However, Carlos Dominguez, DOF secretary, said having the Congress-approved version is better than having nothing.
“I think, just from my opinion, most likely we will not quite hit the total amount that will be required (for the UHC), but again, we’re just talking about estimates now. We have to look at how it will actually work out. Maybe, who knows, Filipinos will actually get into the habit of eating better, smoking less, drinking less so that the total cost of the universal health care is going to go down,” Dominguez said in a press conference at the DOF office in Manila yesterday.
“At the moment, the UHC is one of our major programs to improve the productivity of our countrymen and at this point, we’re only dealing with estimates because we don’t have a UHC program (yet). I suspect that sometime in the future we will have to revisit the estimates and compare it against actual,” he added.
Majority of the proceeds from the new taxes will go to the UHC (60 percent), while 20 percent will go to the Health Facilities Enhancement Program, and the remaining 20 percent to Sustainable Development Goals.
The ratified measure, which will impose higher taxes on “sin products,” is seen to generate P24.9 billion additional revenues.
In comparison, the DOF’s version was seen to yield P36.5 billion in the first year of implementation.
“As I said, when you go into the legislative process, you don’t get everything you want but it’s certainly better than the alternative of doing nothing. People say, ‘Oh, I’m not going to get what I want so I’d (rather) not do it.’ No, that’s not the right attitude, the attitude is we go and do our best,” Dominguez said.
“Maybe it’s not exactly what we want, but the wisdom of the legislature is to be respected and we appreciate the understanding and the actions the legislature has taken because these actions are certainly a lot better than past legislatures so I want to thank them, both houses, for their wisdom and their support for the program to improve the standard of living of the Filipinos in the long term,” he added.
For the first year of the law’s implementation, distilled products will have an additional specific tax of P42 per liter, additional P47 for 2021, P52 for 2022, P59 for 2023, and P66 for 2024; on top of the 22 percent ad valorem tax. A six percent indexation will be imposed thereafter.
For fermented products, there will be an increase of P35 per liter in 2020, P37 in 2021, P39 in 2022, P41 in 2023, and P43 in 2024. A six percent indexation shall also be imposed thereafter.
Heated tobacco products will have an added tax of P25 per pack in 2020 and a uniform increase of P2.50 every year until 2023, which will be followed by a five percent indexation.
Vapes (free base) will have an additional tax of P45 per 10 milliliter and an increase of P5 every year until 2023. Salt nicotine e-cigarettes will have P37 additional tax in 2020 and an additional tax of P5 per year until 2023.
Wines will have an additional tax of P50 per liter over the next five years.
“Our tax reform has a number of building blocks. And we have just passed the building block where we complete the rationalization and the increase in the taxation of products that are not good for your health, namely cigarettes, including sugary drinks taxes and now alcohol and e-cigarettes. When we look at the entire project, and we look at those three achievements of the Duterte administration, we have increased our collection of these sin taxes by almost 70 percent from what was achieved by the Aquino administration,” Dominguez said.
“I only have the figures for the alcohol and cigarettes, I haven’t put in here the figures for the sweetened beverages, but just the alcohol and cigarettes are already 70 percent more than what was achieved under the Aquino administration. Of that 70 percent, roughly 50 percent comes from increased rates of excise tax on alcohol, tobacco and e-cigarettes, plus around 20 percent more from better compliance by the manufacturers and that also comes hand in hand with stricter enforcement. So both of us, the administration and the legislature are working hand in hand on this,” he added.