THE implementation of the sin tax law failed to reduce cigarette consumption, which is one of the main reasons why Congress insisted on raising the taxes of tobacco and liquor.
Senator Franklin Drilon admitted this on Tuesday, adding that smokers shifted to cheaper brands after the price increase on popular brands because of the new tax rates.
“I understand there is a lot of downgrading because of the higher taxes, there is shift to cheaper brands,” Drilon said in an interview at the sidelines of the Department of Health’s Red Orchid awards ceremony.
Drilon said one of the targets of the sin tax law is to discourage Filipinos, especially minors, from smoking.
But Senator Ferdinand Marcos Jr. claimed that proponents of the sin tax bill used wrong assumptions.
Although unhappy with the results of the measure with regards to health aspects because consumption has not gone down, Drilon is optimistic that the situation will change once the government imposes the unitary tax scheme for all kinds of cigarettes, which is also included in the law.
As for the expected additional revenues from the implementation of the sin tax law, Drilon claimed that the excise tax collection is meeting the target as predicted when the measure is still being discussed at the plenary.
“Contrary to the claims of cigarette manufacturers that we will suffer because of smuggling, tax evasion, the records will show that we are meeting our targets,” Drilon said.
The first year increment for the excise tax is about P33 billion and about P22 billion will come from tobacco taxes.
While Drilon said the government is meeting its target, he did not provide figures to support it.
Marcos, in an earlier interview, said that government failed to collect even a single centavo from the P33.9 billion expected additional revenue from the sin tax law during the first quarter of the year.
Aside from failing to produce the needed projected revenue for the government during the first quarter, the implementation of Republic Act 10351 did not discourage people from smoking as they shifted to other cheaper brands being smuggled into the country, he said.