Senate approves higher sin tax on cigarettes

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Metro Manila (CNN Philippines, June 3) — The Senate approved on Monday a bill raising the taxes on cigarettes, which came six days after President Rodrigo Duterte called for its passage.

Voting 20-0-0, the chamber approved Senate Bill 2233 which will further increase the excise tax on tobacco products. The measure was amended to include "heated tobacco products" and "vapor tobacco products" like e-cigarettes to be also subject to excise taxes, following amendments proposed by Senator Ralph Recto.

The Department of Finance is counting on the measure to help fund the implementation of the Universal Healthcare Act, which seeks to cover all Filipinos with health insurance and offer basic health services. This is seen to cost ₱257 billion for the first year, with ₱195 billion covered by the national budget. The ₱62 billion gap is eyed to be funded by higher duties from cigarettes and alcoholic drinks.

Once signed into law, SB 2233 will jack up the excise tax on cigarette packs from ₱45 by Jan. 1, 2020 to ₱60 by 2023. The following year, the tax will rise by five percent annually. The rates for e-cigarettes are lower, with a minimum of ₱10 per refill of vapor products less than 10 milliliters.

The government currently levies a tax of ₱35 per cigarette pack, as provided under the Tax Reform for Acceleration and Inclusion law that took effect last year. On May 28, President Rodrigo Duterte certified the measure as urgent, saying it was a much-needed bill to fund expanded medical services and benefits to Filipinos as provided under Republic Act 11223.

House Majority Leader Fredenil Castro said last week that their chamber is open to adopt the Senate version just to make it to the deadline, doing away with the need for a bicameral session to harmonize the two tax bills.

The 17th Congress closes this Friday, which will bring all pending bills back to zero. Tuesday would be the last session day for the House and Senate after June 5 was declared a holiday as the Muslim community observes Eid'l Fitr or the end of Ramadan.

Once adopted by the House, the Senate bill may be sent to Malacañang for Duterte's signature.