The Singson Sin Tax Sabotage Bill: A deceptive attack on our health and revenue

At the Jan. 14 hearing of the House Ways and Means Committee, a heavy blow to public health and fiscal responsibility was averted. Pro-tobacco legislators had prepared to hijack the Anti-Illicit Tobacco Trade Bill (House Bill 10329, substituted by House Bill 11286) by inserting a provision that would have removed the annual indexation of tobacco excise taxes. This would have sabotaged one of the cornerstone reforms of the Sin Tax Law — the indexation of the excise tax to inflation which preserves its real value.

Thankfully, the insertion did not materialize. The Committee, under the leadership of its chair, Joey Salceda, approved the bill as originally agreed upon, prioritizing strong enforcement against illicit trade without compromising tax policy. We are happy that the Committee decided to uphold the integrity of the bill, which civil society and the bill’s main sponsors worked tirelessly to refine and strengthen.

The bill’s positive features include a digital tracking and tracing system combined with physical tax stamps, stiffer penalties combined with stronger enforcement capability, and a mechanism for coordinated action among government agencies to combat illicit trade.

But the Sin Tax Law still continues to face serious threats in the face of the insistent attempt to remove the provision on annual indexation of rates to inflation. Just days after the Committee meeting, Representative Kristine Singson-Meehan filed a standalone bill (House Bill 11279) that would essentially lower tax rates but deceptively calls it a moratorium. “Moratorium” is not what it is. What Singson-Meehan and company want is a lowering of tax rates.

We call the Singson-Meehan bill the “Sin Tax Sabotage Bill.” It is a direct and brazen rollback of hard-won reforms.

Supporters of the Sin Tax Sabotage Bill claim it is a necessary measure to address the illicit tobacco trade. However, this narrative is misleading, it is deceptive. Let’s be clear: Singson-Meehan’s Sin Tax Sabotage bill will not solve illicit trade. Instead, it would reduce the price of legal cigarettes by a few pesos per pack — which will increase smoking, particularly among price-sensitive groups like the youth and the poor. At the same time, it will NOT dissuade smokers from buying illicit cigarettes, which remain much, much cheaper.

What this Sin Tax Sabotage Bill achieves is boosting the profits of tobacco companies while slashing government revenues. Based on our estimates, this proposal would cost the government at least P27 billion in forgone revenues from 2026 to 2030, undermining funding for essential programs like Universal Health Care (UHC).

The Department of Finance (DoF) and Bureau of Internal Revenue (BIR) themselves cannot guarantee that the proposal would curb illicit trade. They have offered no solid proof in terms of clear data and metrics and projections. Hence, they cannot offer credible assurances. The Singson-Meehan bill only offers the empty promises of the tobacco industry, which history tells us cannot be trusted.

Paradoxically, this attempt to lower Sin Tax rates comes after the DoF’s 2024 “cash sweep” drained PhilHealth funds to avoid raising taxes. Yet now, the same department appears complicit in supporting a revenue-eroding measure that will further weaken the funding for UHC.

Who benefits from this? Not the government, not the Filipino people, and certainly not public health. The only beneficiary is the tobacco industry.

Finance Secretary Ralph Recto, who once proclaimed “no new taxes,” now stands silent as this revenue-eroding proposal undermines public health funding. Sin Tax indexation is a lifeline for millions of Filipinos, yet Recto seems content to prioritize tobacco industry profits over the people’s welfare. This betrayal of Sin Tax Reform reflects a broader pattern of governance failures, where funds for UHC are diverted to pork-laden appropriations, and laws designed to protect public health are systematically weakened.

Let us not mince words: lowering tax rates in response to illicit trade sends a resounding message that Congress has lost confidence in the BIR’s ability to enforce our tax laws. It insults the BIR.

It rewards non-compliance and undermines public confidence in our institutions. The proper response to illicit trade is not to weaken our tax policies but to strengthen enforcement.

Global best practices — as articulated by the literature and the recommendations of the World Health Organization — show that tackling illicit trade requires a robust tracking and tracing system, shutting down unregistered factories, prosecuting smugglers, and imposing stiffer penalties on offenders. These are the solutions found in House Bill 10329, which was rightly passed without the harmful tax rollback provision now being resurrected in HB 11279.

HB 11279 threatens to sabotage the health and revenue gains from the landmark Sin Tax Reforms. By eroding the real value of tobacco taxes, the proposal is effectively a rollback that would make cigarettes more affordable over time, leading to increased consumption. Our simulation also shows that the Singson-Meehan bill, if passed, would result in an additional 400,000 smokers by 2030.

As more Filipinos, especially those in vulnerable groups, are pushed toward smoking, the burden of tobacco-related diseases will grow, further straining our already underfunded health system.

When the tobacco industry speaks of “breathing room,” they are not referring to relief for smokers or the government — they mean higher profits for themselves at the expense of the public’s welfare. And when legislators like Rep. Singson-Meehan push for a proposal like HB 11279, let’s call them out for serving the tobacco industry, not the people.

This latest attempt to sabotage Sin Tax Reform is nothing short of a betrayal of the Filipino people. It prioritizes corporate greed over public health, fiscal sustainability, and good governance. We must reject outright this dangerous deception.

AJ Montesa is a program officer for research and heads the tax policy team of Action for Economic Reforms.