10351

Sin Tax Law

Tobacco and alcohol are one of the most top selling products in the nation not just because it is highly addictive but it has an average yet affordable price. You can buy a bucket (6 bottles) of beer with just 175 pesos. I can’t disagree that these products are a big contribution to the economy of the country. Every year, millions of bottles and packets of alcohol and cigarettes are sold each year. Plus, these products help people to get to know each other via parties as these products tend to boost confidence (e.g. when you get drunk). Although these products are a great help to the economy, high death rates also occur because of these. Too many accidents are happening and crime rates are rising too. The Nicotine in the tobacco can destroy the lungs, or worst, the whole body.

        



The Philippines aim is to create a clean, healthy and peaceful environment, this can’t be achieved if too many people drink and smoke. So on December 20, 2012, President Aquino signed Republic Act No. 10351 or the sin tax law. This law raises the normal prices of these commodities (Cigarettes, beer, liquor, wine and other alcoholic beverages). He said:  

“Today, we are again making history: for the past 15 years, we have been trying to reform the tax structure of imposing excise tax on tobacco and alcohol products. After 15 long years, we have finally succeeded. As the people’s servant, I shall personally ensure that this government shall implement the Sin Tax Reform Act of 2012 in a transparent and accountable manner starting Jan. 1, 2013,”.

Price Range after tax implementation

Starting January 1, 2013, the tax on cigarettes packed by hand, which comprise the bulk of tobacco products sold in the country, is P12 per pack for those with a net retail price (excluding the excise tax and the 12-percent value added tax) of P11.50 and below. For those with a higher retail price, the tax is P25. The rates will go up to P17 and P27 in 2014, P21 and P28 in 2015, and P25 and P29 in 2016. There will be a single rate of P30 per pack starting 2017, rising by four percent every year.

The old levies ranged from P2 per pack for low-priced cigarettes to P28 for those classified as premium.

For fermented liquor (beer), the tax is P15 per liter if the net retail price is P50.60 and below per liter, and P20 per liter for those with a higher price.

The rates will rise to P17 and P21 in 2014, P19 and P22 in 2015, and P21 and P23 in 2016. A uniform tax of P23.50 will be imposed starting in 2017, which will increase by four percent every year.

For distilled spirits, the tax is 15 percent of net retail price plus P20 per proof liter, rising to 20 percent plus P20 in 2015.

In the case of wine, the tax is P200 per bottle of 750 ml (milliliter) if its net retail price is P500 or less, and P500 per if the wine costs more.

According to Sen. Franklin Drilon, principal author of the Senate version of the sin tax bill, additional sin tax collections for 2013 would amount to P33.96 billion, P42.82 billion in 2014, P50.63 billion in 2015, P56.86 billion in 2016, and P64.18 billion in 2017, for a total of P248.49 billion in five years.

Some 70 percent of such collections would come from tobacco products.

The law allocates 15 percent of incremental revenues for programs that would benefit tobacco farmers.


Of the remaining 85 percent, 80 percent “shall be allocated for universal health care under the national health insurance program, the attainment of the Millennium Development Goals (MDGs) and health awareness programs; and 20 percent shall be allocated nationwide, based on political and district subdivisions, for medical assistance and health enhancement facilities, the annual requirements of which shall be determined by the Department of Health.”

The 20 percent for medical assistance and hospitals to be distributed among “political and district subdivisions” is additional pork barrel funds for members of Congress.

source: http://www.philstar.com/headlines/2013/01/01/892045/higher-sin-taxes-take-effect-today

Personal Reaction:


I have mixed feeling to this law. As a semi-drinker, I’m a bit sad that the prices for alcohol are higher than average. I’m only a student and I can no longer afford it just like before. I kept thinking that maybe this is for my own good, not just me but for everyone out there. Maybe this law is a sign that it is time that we control our vices and to focus more on our lives. I am also happy towards this law because the prices of cigarettes are higher, this way, smokers can only buy limited and smoke less. I am irritated getting near to smokers for some reason I cannot explain. This law can help us to stop spending so much money.

This law may reduce the performance of the economy but it is for a greater good. The country might get rich but there is chaos among the people. The income that would be produced from the tax is allocated to different areas so there is not much of a change. Also, the tobacco farmers would not lose their jobs, they would also get 15% from the income produced. All-in-all, this law is a great help to the country and it’s development. I am happy and proud that his law is passed. This is a huge leap of the Philippines towards a peaceful and prosperous future.