THE Department of Finance projects the Universal Healthcare (UHC) Act to have a total funding gap of P426 billion in the first four years of implementation if a fresh tax increase on tobacco and alcoholic beverages is not passed.
“In 2020 — the first year of UHC’s implementation — the program is estimated to cost P258 billion, which the government can cover from its current funding sources from the national budget, the Philippine Amusement and Gaming Corp. or PAGCOR and the Philippine Charity Sweepstakes Office or PCSO, in the amount of P195 billion. Without ‘sin’ tax reform, UHC will be left with a funding shortfall of around P62 billion, Finance Secretary Carlos G. Dominguez III said in a speech at a joint news conference of the Finance and Health departments.
He added: “Without the sin tax reform, the cumulative funding gap by 2024 will stand at P426 billion, about one-third of the total cost.”
Both the DoF and the Department of Health (DOH) urged the 17th Congress to pass laws further increasing taxes on alcoholic beverages and cigarettes to fully implement the UHC law signed by President Rodrigo R. Duterte in February.
Senate Bill (SB) No. 1599 filed by Senator Emmanuel D. Pacquiao seeks to increase the current uniform excise tax rate on cigarettes and other tobacco products to P60 per pack from the current P35. This will be adjusted upward by 9% per year thereafter.
SB No. 2197, also proposed by Mr. Pacquiao, seeks to impose excise taxes on alcoholic beverage of at least P40 per liter and impose a unitary tax system on fermented liquor. This is expected to generate P236.6 billion in additional revenue within five years.
The 17th Congress, currently on a Feb. 9-May 19 break for the midterm elections, can act on bills between May 20 and June 7. Any measure that fails to pass will have to be filed again with the next Congress.
“We don’t have plan B. This is the only plan and it is ready to be passed,” Mr. Dominguez said in the news conference.
“We need to secure sufficient and sustained resources to ensure that the healthcare system will… transform as envisioned in the next 10 years. Now that the President has signed the UHC into law, we need to make sure that this unprecedented investment in Filipino’s health is funded sustainably,” he added.
“We look forward to the support of our counterparts in the legislature, during this crunch time. This is the final round, tapusin na natin ang boksing (let’s finish the match),” Health Secretary Francisco T. Duque III said.
The sin tax law of 2012 was able to curb smoking prevalence to 22.7% in 2015 from 29% in 2012, but Mr. Dominguez said that tobacco product use has started to climb again.
“[R]ecent polling shows that smoking prevalence has again began to increase, reaching 23% in 2018. This is an warning sign. With the rise of incomes and slower increases in tobacco taxes, for the past three years, tobacco has again become affordable to the youth and average Filipinos,” he said.
He added that the 2012 sin tax law failed to increase excise taxes to the satisfaction of finance and health authorities, leading among others to the continued rise in binge drinking among consumers.
“I presented the facts and issues to the President and the rest of the Cabinet. We were given clear and urgent instructions: tax alcohol and tobacco at higher rates than current levels and fund UHC beginning this year,” Mr. Dominguez said. — Karl Angelo N. Vidal