Sin Tax

Topics: Tax, Taxation in the United States, Pigovian tax Pages: 4 (1148 words) Published: September 18, 2012
MANILA, Philippines (3rd UPDATE) - The Aquino government has made giant steps in what his predecessors tried but failed to do: pass a sin tax reform bill at the House of Representatives, inching closer to enacting it into law. The popular and determined government put its weight behind a piece of legislation that rests at the heart of industries where politics and economics traditionally intersect: sin taxes. On late Wednesday, June 6, a reform bill on the most crucial element that makes "sin" products--tobacco and alcohol--affordable made it through the plenary at the Lower House. It has been more than 15 years since a sin tax bill made it out of committee meetings and was finally voted on by lawmakers. In a landslide vote, 210 lawmakers favored the Palace-backed House Bill 5727, while 21 opposed and 5 abstained. The votes overcame traditional issues, such as job losses and smuggling, raised by anti-sin tax reform lawmakers. 

Check Rappler's live blog on what went on during the crucial voting at the House. The bill will result in higher prices for most cigarette and alcohol brands, addressing a stigma that the cheapest sin products in the world are found in Philippines, no thanks to strong lobby from the politically-connected industry players. 

It will also raise between P31 billion to 33 billion in taxes during its first year, boosting the fiscal health of the government so it could afford to provide more social services, among others.

More expensive

When the sin tax reform bill becomes a law, alcohol and cigarettes--especially the lower-priced brands--will get more expensive for the average consumer. At its current version, cigarette packs that were more than P11.50 will cost an additional P30 in 2013. While a low-cost beer under P50.60 will cost an additional P13.75. Below is the difference between the current 4-tiered tax system and the HB 5727's two-tiered one:

Below are the HB5727's reforms for the specific liquor products:

Rates will be...
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