STATEMENT OF SECRETARY FLORENCIO B. ABAD ON THE PASSAGE OF HOUSE BILL 5727 IN THE HOUSE OF REPRESENTATIVES

“Together with the Aquino administration, I laud the members of the House of Representatives for approving House Bill 5727. Through this groundbreaking move, we are much closer to reforming the current tax regime for tobacco and alcohol products, which has been in place for more than fifteen years and has proven ineffective and outdated.

“Should the Senate move in the same direction as the Lower House did, the updated sin tax system will certainly boost tax efficiencies in the country, as well as increase government revenues by around P33 billion in the first year of its implementation. Most of this will be directed to critical health services, including health coverage for indigents and informal sectors under the National Health Insurance Program, as well as the development and rehabilitation of various health facilities in several regions and provinces.

“Once approved, 15% of sin tax revenues will also be used to support tobacco farmers, who may be adversely affected by the measure. Tobacco- and non-tobacco growing provinces will likewise have a share in the revenues generated by an updated excise tax regime. In its original form, HB 5727 was expected to generate at least P60.7 billion, which will be channeled to 81 beneficiary provinces. This is a far cry from the 16 provinces now being supported by the present excise tax scheme.

“Furthermore, excise tax collections under HB 5727 are set to increase every year, thus ensuring better assistance for affected tobacco farmers, as well as increased support for the Administration’s health programs.

“More importantly, however, restructuring the sin tax system will go a long way toward improving the health and well-being of Filipinos. At present, tobacco and alcohol products enjoy very low retail prices in the country, and an updated sin tax scheme will help discourage Filipinos—particularly the youth—from engaging in harmful health practices.

“We enjoin our Senators to fully support the Aquino administration’s bid to overhaul the excise tax system, not only to advance sustainable fiscal growth in the country, but also to protect the best interests of the Filipino people.”