House Bill 5727

The rationale for reform is clear. This measure seeks to help fund public healthcare, which is a key thrust in the administrations drive for inclusive growth. It also seeks to improve the efficiency of tobacco farmers, strengthen the current tax structure, and sustain revenue growth. Should the Senate move in the same direction as the Lower House did, the updated sin tax system will certainly boost tax efficiencies in the country, as well as increase government revenues by around P33 billion in the first year of its implementation. Most of this will be directed to critical health services, including health coverage for indigents and informal sectors under the National Health Insurance Program, as well as the development and rehabilitation of various health facilities in several regions and provinces. Once approved, 15 percent of sin tax revenues will also be used to support tobacco farmers, who may be adversely affected by the measure. Tobacco- and non-tobacco growing provinces will likewise have a share in the revenues generated by an updated excise tax regime. In its original form, HB 5727 was expected to generate at least P60.7 billion, which will be channeled to 81 beneficiary provinces. This is a far cry from the 16 provinces now being supported by the present excise tax scheme. Furthermore, yearly excise tax collections under HB 5727 are set to increase, thus ensuring better assistance for affected tobacco farmers, as well as increased support for the Administrations health programs.