Double vision on taxes

A proposal by the Philippines senator Manny Pacquiao to hike taxes on tobacco products needs to be backed by further studies, according to an ABS-CBN News story quoting senator Sonny Angara.

Last week, Pacquiao filed a bill that, if passed, would increase the tax on cigarettes from P30 per pack to P60 per pack, and then increase it by nine percent each year.

Angara said that the Senate Committee on Ways and Means, which he chairs, would consider the proposal ‘as soon as the appropriate government agencies have submitted additional and substantial studies and analysis’.

‘It is important to note that the sin tax law already provides for an automatic indexation of tax rates, meaning they go up every year as it is,’ Angara said in a statement.

Angara said that revenues from the sin tax law had been increasing since its enactment in 2012, but that they had fallen in 2016, despite higher excise tax rates.

He said the government needed to determine why this had happened before considering changes to tobacco taxes.

‘The sin tax collections fund our PhilHealth premiums that enabled the government in recent years to cover more beneficiaries,’ Angara said. ‘We don’t want to see a decline in the funding that will reduce the benefits for PhilHealth beneficiaries.’

Pacquiao is reportedly planning to introduce the bill during the period of amendments in November, when senators finalize their version of the first package of tax reforms.