DARANUDOR TI ILOCANDIA | Taxing tobacco, tricking the people


Tax reform laws since 1996, increasing the tax imposed on tobacco products used two populist slogans – raising funds for public health while reducing the number of smokers and bigger excise tax shares for local governments producing the crop. In particular, the rapid evolution policies and public education governing the country’s sin tax in a span of two decades focused on these objectives.

Republic Act 10351 or the Sin Tax Law of 2012 contains the most recent change. Passed during the Aquino III presidency, the government considered the law as good for both the fiscal targets and public health. Under the law, after deducting the shares for LGUs as mandated by Republic Acts 7171 and 8240, the remaining amount from the incremental revenues is earmarked for health.

While the recent tax reform, RA 10963 or Tax Reform for Inclusion and Acceleration (TRAIN) Law adjusted the tax increment, the overall result remains the same, an increased tax collection. Added revenue under TRAIN is P29 billion from 2018 to 2022 with about P9 billion going to healthcare.

Meanwhile the 15 percent LGU shares from the collected tobacco excise tax also increased significantly. Total shares from RAs 7171 and 8240 rose from P5.64 billion, P10.65 billion, P13.00 billion and 16.37 billion in 2012, 2013, 2014 and 2015 respectively. The Department of Finance expects it to rise further with the September collection reaching P106.89 billion or 11.33 percent above their target for the period of January to September.

In theory, earmarked funds ensure that people benefit from taxes. But despite the dizzying figures, the promise of universal health care (UHC) and support for development of rural areas through the earmarked funds are still far fetch.

There is nothing universal about the government’s hype for a universal health care. The drafts before the House (HB5560) and the Senate (SB1458), identified by both chambers as a priority bill, are mere smoke screens to further privatize and commercialize public health care.

According to Health Alliance for Democracy, if passed, the proposed law on UHC will transform PhilHealth to the Philippine Health Security Corporation. The office will buy health services while mandating citizens to enroll with about P2,400 annual fee. This means that besides the allocation from the people’s tax, the PHSC is also assured of funds from the people’s contribution.

Undeniably, the policy focuses on profit generation by handing the PHSC the mandate to gauge the quality of health care service based on its financial sustainability and return of investment.

On the other hand, corruption issues hounding the funds from RAs 7171 and 8240 remain unresolved. Use of the funds for projects not related to agriculture remains unchecked. Even the discovery of glaring abuse of the excise tax fund by Ilocos Norte governor Imee Marcos has not budged the government or private citizens to file graft and corruption charges against her.

Farmers are also relentless in their complaint of the local governments’ failure to deliver enough production subsidy, suitable technology and support infrastructures for agriculture from the fund.

Taxation is part of the government’s exercise of its authority. However, this authority comes with the responsibility to use the fund to improve the lives of its citizens.

But under the current social conditions, proposals to raise taxes only serves those in power. The current state of our taxation and distribution system only sustains bureaucratic corruption, political dynasties and patronage politics.

Health care and rural development are the least concern of the government that has continuously denied the people’s demand for free health care and genuine agrarian reform.#


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