Finance Secretary Carlos Dominguez III has made an 11th-hour appeal to senators to speed up the approval of a new “sin” tax reform law that would further impose higher excise tax rates on alcohol and tobacco products to help fill the massive funding gap for the Universal Health Care (UHC) program and ensure affordable and quality health care for every Filipino family starting next year.
Dominguez also urged senators in a recent meeting with them to continue pushing fiscal reforms in the incoming 18th Congress to give the Philippines “a good chance” of securing the much-coveted single “A” grade for the country’s long-term sovereign credit rating within two years.
A single “A” investment grade credit rating, Dominguez said, will not only benefit the government and private sector investors through lower borrowing rates when they invest in projects for economic expansion but will also mean ordinary Filipinos will also get to pay lower interest rates on their loans.
“All of these will translate into larger investments and more jobs for Filipino workers. So, you see, it is not just about getting an upgrade. It is about upgrading everyone’s life,” Dominguez said during his meeting with Senate President Vicente Sotto III and the other senators following last week’s resumption of session of the 17th Congress before its sine die adjournment.
During that meeting at the Senate, Dominguez described the 17th Congress as “among the most productive and hardworking that I have ever seen.”
The efforts of the 17th Congress in passing crucial measures such as the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the Rice Liberalization Law, among others, will be judged by history “as game-changing reforms that placed the Philippines on a higher growth path,” Dominguez noted.
“Among others, these game-changing reforms led to a credit rating upgrade from Standard and Poor’s. The upgrade, from triple B to triple B plus, is a strong vote of confidence in the Duterte administration’s reform agenda,” Dominguez said. “This would not have been possible without the strong support of the Congress. Again, my sincerest appreciation.”
Dominguez said another game-changer, the UHC law sponsored and steered to passage by Sen. Joseph Victor Ejercito, will benefit every Filipino as it is a “first-class” law, but it will only be a “third-class” measure if implemented with insufficient funding.
Government funds are not enough to fulfill the financing requirements for the UHC law beginning 2020, he told senators.
Dominguez earlier pointed out 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 first five years of implementation.
Increasing the excise taxes on sin products to at least P60 per pack for cigarettes and at least P40 per liter for alcohol products would provide the government the resources it needs to fill the funding gap for the full and proper implementation of the UHC law, Dominguez said.
Without adjusting the current “sin” taxes to at least these rates, which was proposed by Sen. Emmanuel Pacquiao, Dominguez said the cumulative funding gap by 2024 will reach P426 billion.
“With less than three session weeks left, I appeal to the Senate to prioritize increasing excise taxes on tobacco and alcohol. This reform is already in an advanced stage, so there is just enough time to deliberate, pass, and ratify the measure,” Dominguez said.
He said President Duterte is ready to certify the new “sin” tax reform bill as urgent once the ways and means committee report is signed by the Senate.
“It has always been the President’s goal to ensure every Filipino family receives appropriate, affordable, and quality health services,” Dominguez said.
“We know you share this goal, and together, we believe we can make it happen for all Filipinos. They are counting on us to do what we can in the next few weeks,” Dominguez said during the meeting.
The 17th Congress reopened on May 20 and will hold sessions till June 5 before its sine die adjournment on June 6 to make way for the new set of lawmaker-members of the next Congress, which will open on July 22.
In 2020—the first year of UHC’s implementation—the program is estimated to cost around P257 to 258 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 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.
Without a new “sin” tax reform law and at current premiums, members of the Philippine Health Insurance Corp. (PhilHealth) will continue to be covered for only 18 primary care drugs and seven health conditions while shouldering 90 percent of the cost of prescribed medicines.
But if the current Congress gets to pass the law before it adjourns in June, PhilHealth coverage will expand to cover 120 drugs and there will be no limit on primary care treatment conditions.
The Department of Health (DOH) has also proposed that medicine purchases will be limited to a fixed fee—the cost of the transaction alone.
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