Philippines: Alcohol Tax to Fund Free Health Care

The House of Representatives of Philippines plans to pass an act on increasing and restructuring the excise tax rates on alcohol as one of its priority legislative measures, along with the proposed national budget, before congress goes on break on October 5th.

President Duterte mentioned the proposed act on alcohol excise taxes in his fourth State of the Nation Address on July 22. As reported by Yahoo Finance, if the legislation is passed the President plans on financing a free health care programme, partly through taxing of liquor and the Finance Secretary Carlos Dominguez wants this legislation to be passed within the year.

Currently, distilled spirits are levied with a tax of 20% of the retail price and a specific sum in pesos per proof liter. The proposed measure would raise the rates using the current tax structure.

Increasing alcohol taxes to achieve universal health coverage

As reported by Business World, the Philippines signed the Universal Health Care (UHC) Act into law earlier in the year. During the 17th Congress, the Department of Finance (DOF) of Philippines stated that the first year of UHC still lacks around P63 billion in order to be fully implemented.

To bridge this gap, the previous Congress passed an increase in tobacco taxes. This measure is expected to generate around P15.7 billion in incremental revenue. In addition, should the alcohol tax rates proposed by the Department of Finance be approved, they are projected to raise P33.6 billion in its first year of implementation.

The funds collected from the alcohol and tobacco taxes, together with the earmarking of 50% of the revenues from the tax on sugar-sweetened beverages, will address the funding shortfall for the first year of UHC, and for the succeeding years as well.

Senate signals readiness*

The senate is showing readiness to pass the tax reform package within the next 15 to 18 months. The Department of Finance wants the taxes passed before preparations begin to 2022 national elections.

Fifteen to 18 months – if you have regular hearings, that’s a good time,” said Senate Ways and Means Committee chair Pia Cayetano, as per the Inquirer.

But I don’t want to give the impression to my colleagues that I’m rushing them. I want them to know that I will be available to have these hearings. And I know the DOF has made themselves available to give technical briefings outside of the hearings,” Cayetano said.

The proposed alcohol tax reform had already been tabled in the 18th Congress by House Ways and Means Committee chair Joey Salceda and others as tax measures had to emanate from the lower chamber.

Taxing health harmful products: Triple win measure

This measure by the Philippines is specifically important in view of the United Nation’s (UN) High-Level Meeting (HLM) on Universal Health Coverage (UHC) coming up in September 2019.

IOGT International advocates for making full use of health promotion taxation as the Philippines has done with tobacco taxation and plans to do if the above mentioned alcohol excise tax legislation passes.

Raising taxes on alcohol to 40% of the retail price could have an even bigger impact [than a 50% increase in tobacco taxation].

Estimates for 12 low-income countries show that consumption levels would fall by more than 10%, while tax revenues would more than triple to a level amounting to 38% of total health spending in those countries,” states the World Health Report (2010).

Alcohol taxation holds significant potential for population health, for helping achieve the sustainable development goals and also for significantly contributing to financing health and development.

As such Alcohol taxation is a triple win measure:

It helps reduce and prevent alcohol-related harm.
It helps promote health and sustainable development.
It helps raise domestic resources for health and development.

Evidently, taxing of health harmful products such as alcohol is good for people, sustainable development and universal health coverage and should be a key policy measure within governments.

*This article was updated on August 7, 2019 as per news from Inquirer.Net.

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Philippines: Alcohol Tax to Fund Free Health Care