DOF urges Congress to let sin tax law ‘run its course’

DOF urges Congress to let sin tax law ‘run its course’

- in Economy
Finance news

December 8, 2016 — Finance Secretary Carlos Dominguez III has urged the congressional oversight committee on the Sin Tax Reform Act to allow Republic Act No. 10351 or the Sin Tax Reform Act to be fully implemented and to “run its course” because it is“a very good law.”

Dominguez said the committee should start reviewing the revenue and health impact of the tax rates mandated under this law to determine what measures should be undertaken by the Legislature once the statute matures in 2017.

RA 10351 mandates that the current two-tiered tax rate merge into a unitary tax rate of P30 per cigarette pack for all brands starting January 1, 2017, and the rate indexed to inflation  by increasing it to 4 percent annually.

“We consider the Sin Tax Law or RA 10351 to be a very good law,” Dominguez said.

“Our position is to fully implement the law and let it run its course, including Section 11, which states that ‘starting the third quarter of calendar year 2016, the Committee (referring to the Congressional Oversight Committee) is mandated to review the impact of the tax rates provided under this Act.’”

Dominguez said the Department of Finance (DOF) expects the review to occur as mandated by law and for it to be “done well to inform (us) what we should be doing in the future.”

Finance Undersecretary Bayani Agabin, meanwhile, clarified that the figures on the unitary sin tax system that is supposed to be adopted beginning next year as mandated by law are still “very preliminary numbers.”

He said the DOF is still conducting a thorough study on the sin tax rates, taking into account the public health impact of the law and the price elasticities  of  cigarettes.

“When this was asked during the hearing (last Monday) of the House committee on ways and means, I mentioned that the figure is very preliminary and we are still studying the ideal price point considering the price elasticities of the products as well as the intended health effects of the sin tax law,” Agabin said.

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