DoF: P17-B revenues seen from sin tax bill
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Fri, 20 Dec 2019 17:13:16 +0000
THE government’s net incremental revenue from the just-ratified sin tax bill is estimated to reach P17.1 billion next year, according to a senior Finance official.
In a statement on Friday, the Department of Finance (DoF) quoted Undersecretary Karl Kendrick Chua as saying the bill that sought to increase the excise tax imposed on alcohol, heated tobacco and vapor products was estimated to raise an initial P22.2 billion in the first year of its implementation.
The Finance department also estimates revenues totaling P137.2 billion from 2020 to 2024, he added.
Chua, however, noted that the bill also included a provision that would exempt the sale and importation of all prescription medicines for high cholesterol, diabetes and hypertension from value-added tax.
This exemption would then be extended to include medicines for mental illness, cancer, kidney diseases and tuberculosis by 2023, he said.
That said, the Finance official reported that his department was studying the revenue impact of these exemptions.
He said preliminary data suggested that projected revenue loss from this tax break could reach P5.2 billion in the first year of implementation, or a total of P35.1 billion by the end of 2024.
With this, the net incremental revenue of the ratified bill is P17.1 billion in 2020, and a total of P102.1 billion by 2024.
Earlier, Finance Secretary Carlos Dominguez 3rd said he welcomed the measure’s ratification, but emphasized that the projected revenues was not enough to fund the government’s Universal Health Care (UHC) program.
The incremental revenue for the government that is estimated to be raised from the first year of implementation of the new measure “will not quite hit the total amount” earmarked for UHC program, according to him.
The program will require an initial budget of P257 billion in its first year of implementation. Of the total, P40 billion is expected to be sourced from the sin-tax revenues, while the rest will be provided under the national budget.
“Maybe it’s not exactly what we want, but the wisdom of the legislature is to be respected and we appreciate the understanding and the actions the legislature has taken because these actions are certainly a lot better than past legislatures,” Dominguez said.