For better or for worse, the sin tax bill will very likely be passed by early next week. So says Senator Franklin Drilon, who took over as chairman of the Senate ways and means committee after an earlier version of the bill forwarded for approval by former chairman Senator Ralph Recto was rejected for being too watered down.

The revenue measure has been the subject of intense debate inside and outside the legislature for quite some time. But having been certified as urgent by the Aquino administration, it is expected to pass any gauntlet without too much trouble. The administration has more than enough allies in the Senate to guarantee this.

More importantly, the government needs the income to be derived from increased taxes on “sin” products like tobacco and alcohol for all its new and old projects and programs, as well as to pay for the salaries of the bureaucracy. Year by year, the government’s operational expenses increase, and taxes are its primary source of funds.

Furthermore, the expected hefty increases in the retail prices of cigarettes would redound to the good of the population in terms of improved health. There is no doubt that cigarette smoking is a serious health risk. While the additional tax is not expected to result in smokers giving up the habit, it is hoped that young people will not pick up the vice because of the affordability issue. The latest Social Weather Stations survey says 59 percent of young smokers will quit if the sin tax bill is passed.

Under the House version of the bill, the government would have expected annual revenues of P60 billion from taxes on tobacco and alcohol products. Most senators considered this version to be too extreme, thus rendering it impractical.

The Recto version slashed the would-be collectibles to P15 billion, a figure that was not acceptable to the Aquino administration. Recto was forced to quit the committee because he was seen as having taken the cudgels for the tobacco industry. While there is no tobacco grown in his home province of Batangas, one of the country’s biggest cigarette manufacturers owns and operates a factory in the Southern Tagalog province.

Under the Drilon version of Senate Bill 3299, or the Sin Tax Reform Bill, the government can expect to collect anywhere from P40 billion to P45 billion.

As with any revenue measure, there are supporters as well as opponents of SB 3299. Among the latter are the lawmakers from the Ilocos region, the seat of the country’s tobacco growing industry. Senate President Juan Ponce Enrile and Senator Ferdinand Marcos, Jr. are expected to reject the bill because of what they believe will be its ill effects on some 18,000 tobacco farmers.
 
Government’s failure
In so many ways, the national government has failed the country’s tobacco farmers. Long after it had been confirmed that tobacco products posed serious health risks to consumers, the government did little to convince the farmers to switch to other high value crops. As a result, the tobacco farmers kept planting the unhealthy crop despite the growing global move to eradicate smoking.

Another concern raised by the pro-tobacco lawmakers is the probable proliferation of smuggled cigarettes. If local tobacco products become too expensive for the average consumer, smugglers will have a heyday bringing in imported cigars and cigarettes, which will be of the same quality but at a lower cost.

It is hard to imagine all of the Ilocos region’s tobacco farmers losing their primary means of livelihood overnight once the sin tax bill is passed. Certainly there will be hardships for some, but they do not have to panic.

The national government will have a golden opportunity to try and convince the tobacco farmers to try out other crops of equal or higher value, and which will pose no health risks to consumers. In the meantime, the tobacco farms will not become bankrupt as the best case scenario is for tobacco consumption in the country to level off, and not grow anymore.

Eradicating or erasing the cigarette habit of the general population will take a long time. Not just years, but decades.

What can be expected is that the tobacco farmers and manufacturers will lose their comfort zones. Theirs will be a sunset industry, and everyone in the industry should simply prepare for the inevitable.

The sin tax bill is more than a necessary evil. It can pave the way for the redevelopment of what are now the vast tobacco plantations in the north. In the meantime, it will not hurt the government to earn an extra P40 billion to P45 billion to boost its coffers.

The sin tax bill can actually be a win-win situation for all concerned parties.