DBM: Indexation of sin taxes still an Aquino priority measure

A November 9, 2011 press release from the Department of Budget and Management

P33-billion projected revenue for indigent healthcare insurance

Budget and Management Secretary Florencio B. Abad today reiterated that the proposed measure seeking to restructure sin taxes is still one of the priority bills of the Aquino administration.

“The Aquino administration continues to support the indexation of sin taxes on tobacco and alcohol to inflation as a key reform measure. It is expected to generate about P60 billion, of which about P33 billion that we can use for social services for the poor, particularly universal healthcare for the second quintile of poor households,” he said, noting that the first quintile is already being fully assisted starting with the 2012 National Budget.

“This proposed measure is included in the priority measures presented by President Benigno S. Aquino III to, and adopted by, the Legislative-Executive Development Advisory Council (LEDAC) meeting on August 16, 2011. In other words, it is a priority measure that the Aquino administration continues to promote, and I continue to support.”

Abad countered the recent news items that quote him as saying that he and/or the Department of Budget and Management (DBM) opposes the indexation of sin taxes and the earmarking of its revenues for key social services. He said that these were based on an outdated position paper that the DBM submitted to the House Committee on Ways and Means on November 17, 2010.

He clarified that during that time, there was no official position of the Aquino Administration yet on the indexation of sin taxes. “This old policy document has subsequently been reversed by the President’s inclusion of the measure in the LEDAC list of priority bills,” he said.

“Unfortunately, certain sectors who oppose the indexation of sin taxes recycled our old position and tried to peddle it as new to the public through the media,” he said.

Abad said President Aquino pushed for the restructuring of sin taxes to fund universal healthcare among Filipinos, with the ultimate goal to reduce consumption of alcohol and tobacco. The proposed measure would allow the automatic adjustment of tax rates using the relevant National Statistics Office-established tobacco and alcohol indexes, track inflation among other criteria. The measure aims to unify excise tax rates in three years.

Abad added that portions of the revenues to be generated may also fund programs for promoting economically viable alternatives for tobacco farmers and workers.