A recently passed amendment to the Sin Tax Reform Law to revert to the equitable two-tier excise system is constitutionally mandated, according to a veteran lawmaker.
Quezon City First District Rep. Vincent “Bingbong” Crisologo on Thursday said House Bill (HB) 4144 is in accordance with the 1987 Constitution, specifically Article VI, Section 28 that requires Congress to evolve a progressive system of taxation.
“Any product must be taxed according to classification. If the product is classified premium, it must be meted with a higher tax and if a product is non-premium, it must be taxed lower. That’s based on fundamental law,” Crisologo argued during Congress deliberations.
HB 4144, authored by Rep. Eugene de Vera of ABS party-list, proposes a two-tier tax system where cigarette packs priced P11.50 below will be levied P32.00 and those priced P11.50 above will be levied P36.00 plus a five percent annual price increase thereafter.
The current law only imposes a unitary tax of P30.00 regardless of cigarette pack net retail price and a four percent annual increase.
Crisologo attributed the bill’s swift passage to Congress’ bid to balance multiple issues particularly in health, government revenues and the plight of lowly tobacco farmers.
“First, if prices are higher, it will discourage smokers to buy harmful products; second, it will help fill up lost government revenues as the administration plans to lower income taxes; and third, farmers will be able to continue their main source of livelihood,” he said.
Five years ago, a Senate sin tax presentation from Sen. Ralph Recto on October 10, 2012 stated that although the main objective of the sin tax law is to “crush” cigarette smoking, it is an impossible feat to accomplish in the real world.
It said banning cigarettes altogether will weaken the government’s revenue and result in a fiscal shock, adding that a two-tier system seeks to “get more bucks out of fewer packs.”