Higher cigarette taxes up for Duterte's signature

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Metro Manila (CNN Philippines, June 4) — The proposed higher taxes on cigarettes is closer to becoming a law after clearing the House of Representatives and the Senate on Monday, which comes a week after Malacañang pressed for its passage.

The Senate passed a new version of the bill, deferring to demands by House counterparts on the last day of sessions who protested provisions of the measure. The House adopted the updated proposal during their Tuesday plenary session, which happens to be their last before the 17th Congress closes.

Senate Majority Floor Leader Juan Miguel Zubiri asked to reconsider the chamber's approval of Senate Bill 2233 shortly after the Senate's last session day opened Tuesday. The chamber passed the bill on second and third readings yesterday, which sought to raise the excise tax on cigarettes and impose duties on e-cigarettes and vape sticks.

However, Zubiri said he received a call from Speaker Gloria Macapagal-Arroyo Monday night relaying that solons from the Northern bloc "complained" about amendments to the bill, particularly on the manner of remitting taxes to tobacco-producing provinces.

Virginia tobacco leaves are mostly grown in Ilocos Norte, Ilocos Sur, Abra and La Union, and account for 58 percent of total tobacco farmlands in the country, according to the National Tobacco Administration.

While the additional taxes are meant to raise funds for healthcare programs, Republic Act 7171 requires a portion of the proceeds to be allocated to local government units (LGUs) producing tobacco leaves. The money must be "exclusively utilized" for programs to support tobacco farmers and build local infrastructure.

Bill sponsor Senator Sonny Angara then introduced "perfecting" amendments to the measure, which changes the allocation to 50 percent for municipalities and cities harvesting tobacco leaves and 50 percent for the province they belong to. The older version proposed a 40-30-20 percent sharing scheme that will divide proceeds of cigarette sales among provinces, cities and municipalities, respectively.

The amounts will be pro-rated depending on the amount of Virginia-type tobacco leaves which a town or province produces. However, the new measure caps the share of LGUs at ₱17 billion.

The Senate accepted these changes and approved the updated bill on third and final reading with a 21-0 vote. The bill will then be sent to Malacañang for signing into law.

SB 2233 will jack up the excise tax on cigarette packs from ₱45 by Jan. 1, 2020 to ₱60 by 2022. The following year, the tax will rise by five percent annually. The rates for e-cigarettes are lower, starting with ₱10 per refill of vapor products less than 10 milliliters.

The government currently levies a tax of ₱35 per cigarette pack.

The measure has been certified as urgent by President Rodrigo Duterte, saying the additional funds are meant to support expanded benefits as provided under the Universal Healthcare Act.