May 19, 2019 – With only three session weeks remaining in the 17th Congress, the Department of Finance (DOF) and the Department of Health (DOH) have intensified their calls to further raise sin taxes on tobacco and alcohol to close a cumulative funding gap estimated at around P426 billion over the next five years for the full and proper implementation of the Universal Health Care (UHC) program.
Finance Secretary Carlos Dominguez III in a joint press briefing together with Health Secretary Francisco Duque III said that the government needs as much as P1.44 trillion to fully fund the UHC from 2020 to 2024.
However, government funds are not enough to fulfill the financing requirements beginning 2020. Thus, the urgent need for the Congress to write a new sin tax reform law.
Dominguez said that from 2020 to 2024, all current sources of government funding can cover UHC at around P200 billion annually, while the cost of the program will continue to grow to as much as P1.44 trillion during the same period.
In 2020, the first year of UHC’s implementation of the program is estimated to cost P258 billion, which the government can cover from its current funding sources from the national budget, the Philippine Amusement and Gaming Corp. (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO) in the amount of P195 billion. Without sin tax reform, UHC will be left with a funding shortfall of around P62 billion, Dominguez said.
The new set of excise tax rates jointly proposed by the DOF and DOH backs the proposal of Senator Emmanuel Pacquiao under Senate Bill (SB) No. 1599 to increase the current uniform excise tax rate on cigarettes and other tobacco products from P35.00 to P60 per pack in the first year of its implementation and an additional 9 percent per year thereafter.
Aside from tobacco products, the DOF and DOH are likewise asking the Congress to increase excise taxes on alcohol to at least P40 per liter and impose a unitary tax system on fermented liquors.
Without adjusting the current sin taxes to at least the rates proposed by Pacquiao, Dominguez said the cumulative funding gap by 2024 will reach P426 billion.
“If we do not establish new sources of revenue, we will not have enough funds to properly, fully implement Universal Health Care and ensure a better quality of life for all Filipinos,” Dominguez said.
“We urge both Houses to give due priority to this reform. Approve the Senate version in the bicameral conference and ratify it immediately,” he added.
Health Secretary Duque, meanwhile believes that the remaining session of the 17th Congress is still enough to “collectively take action.”
“We look forward to the support of our counterparts in the legislature, during this crunch time. This is the final round, tapusin na natin ang boksing,” Duque said.
Dominguez said that if the government fails to significantly raise excise taxes on tobacco and alcohol, the UHC program will begin with both a funding gap and the prospect of ballooning costs arising from alcohol and tobacco-related diseases.
He warned that if the government is unable to regularly update sin tax rates to correspond to the increasing purchasing power of consumers, “we run the risk of reversing previous gains.”
Duque, meanwhile, warned the public that the failure to increase sin tax rates now will put the lives of 250,000 Filipinos at risk every year.
President Rodrigo Duterte signed the UHC program into law last February to ensure a better, healthier life for Filipinos.