DOF to focus on congressional OK of higher taxes on alcohol, e-cigarettes for UHC program

Date Posted : July 31, 2019

DOF to focus on congressional OK of higher taxes on alcohol, e-cigarettes for UHC program

Date Posted : July 31, 2019

The contribution of the Philippine Charity Sweepstakes Office (PCSO) to the funds for Universal Health Care (UHC) would be minimal, accounting for only 1.2 percent of the total requirement of P257 billion next year, which is why the Department of Finance (DOF) would devote its efforts instead to pushing the swift congressional approval of higher taxes on alcohol products and e-cigarettes to fill the program’s funding gap.

Finance Assistant Secretary Antonio Joselito Lambino II said passing higher taxes on alcoholic drinks is estimated to add at least P15.8 billion in the first year of implementation and P111.5 billion over the next five years, based on the version approved by the House of Representatives in the previous Congress.

Further increasing the taxes introduced by the previous Congress on e-cigarettes such as heated tobacco and vapor (vaping) products will also augment the funding requirement for the UHC program.

“We will focus our efforts on passing the alcohol and e-cigarette tax package for UHC,” Lambino said.

Bridging the funding gap for the UHC program, he said, will enable the Department of Health (DOH) to push through with its plans to upgrade state medical facilities and establish more hospitals in remote areas, hire and train more doctors and nurses, and scale up non-communicable disease prevention services, especially for low-income families.

If the UHC Law or Republic Act (RA) No. 11223 is fully implemented, PhilHealth would be able to widen its coverage to include free consultation fees, laboratory tests and other diagnostic services. PhilHealth coverage for primary care will also be expanded to cover 120 drugs and there will be no limit to primary care treatment conditions.

In keeping with President Duterte’s goal of improving the living standards of the people, the UHC Law he had signed automatically enrolled all Filipinos in the UHC program, entitling them to an essential health benefit package that includes primary care, medicines, diagnostic, and laboratory tests.

The signing into law of RA 11346, which imposes higher taxes on cigarettes and introduced a new tax on e-cigarettes, will generate around P15.7 billion in revenues in 2020 and P129.9 billion over the first five years of implementation, Lambino said.

From 2020 to 2024, all current sources of government funding can cover UHC at around P200 billion annually. The cost of the program will start at P257 billion in 2020 and grow at an average of around P11 billion to P12 billion per year, amounting to a five-year total of around P1.44 trillion by 2024.

The PCSO, whose gambling operations except for lotto remain suspended on orders of the President, accounts for around P3 billion or 1.2 percent of the P257 billion needed for UHC in 2020.

By 2024, the PCSO’s share will only be P3.6 billion or a little less than 1.2 percent of the P319 billion funding requirement for UHC.

Over a five-year period from 2020 to 2024, its total contribution to UHC is estimated at P16.6 billion, still at only 1.2 percent of the P1.44 trillion funding needed for the program, Lambino said.

Under the UHC law, the PCSO’s contribution to the program is 40 percent of the Charity Fund, net of documentary tax stamp (DSY) payments, and its mandatory contributions as provided under its Charter.

The other sources of funding would be the taxes collected from ‘sin’ products, 50 percent of the national government share from the income of the Philippine Amusement and Gaming Corp. (Pagcor), the premium contributions of PhilHealth members, the DOH budget and the national government subsidy to PhilHealth.

Lambino said that in the first year, the total funding gap would amount to around P49 billion without the PCSO share of P3 billion. The contribution of new alcohol taxes based on old calculations from the version passed by the House in the 17th Congress would be P15.8 billion, leaving a funding gap of about P33 billion.

“We can aim for even higher in the alcohol and e-cig package since the previous version only included alcohol,” he said.

Earlier, Finance Secretary Carlos Dominguez III said that while RA 11346 is primarily a health measure meant to wean smokers from their addiction and discourage young Filipinos from taking up this vice, this law will also help implement the UHC Act as “a first-class law at par with the world’s best healthcare systems.”

Dominguez expressed the hope that the new Congress would also pass a law within this year increasing excise taxes on alcohol products to at least P40 per liter and further raising taxes on heated tobacco and vapor products to the same level as that of regular cigarettes.

The rise in incomes and slower increases in “sin” taxes over the past few years have made cigarettes and alcoholic drinks increasingly affordable to the average Filipino, which, in turn, has increased anew the number of smokers, especially among the youth, and made binge drinking more prevalent.

Raising tobacco taxes in 2012 succeeded in reducing smoking prevalence from 29 percent during that year to 22.7 percent in 2015. However, smoking has gradually been on the rise, reaching 23 percent in 2018, eroding the deterrent effects of the 2012 “sin” tax law.


Date Posted July 31, 2019

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