08/01/2025
Sin Tax Coalition condemns Congressβ proposed reduction of to***co taxes
The Sin Tax Coalition denounces Congressβ brazen proposal to reduce to***co taxes inserted in the unnumbered substitute bill to House Bill 10329, or the Anti Illicit To***co Trade Bill.
In a House Ways and Means Committee hearing convened today by committee chair Representative Joey Salceda, a proposal was made to impose a moratorium on the automatic annual 5% increase in to***co excise tax rates, suspending the yearly increases until 2026.
The proponents of reducing taxes argue that to***co tax revenues have declined due to a rise in illicit trade. However, illicit trade is only being used as an excuse to reduce to***co taxes. Proponents of the reduction in taxes have not provided clear evidence that high to***co tax rates are the cause of the decline in revenue. Responding to illicit trade by reducing to***co taxes is a misaligned proposal.
Sound enforcement is the key to stopping illicit trade. Global literature shows that illicit trade can be neutralized by good governance and good institutions.
Further, sin taxes are primarily a health measure. If illicit trade is indeed rising, then the government should address enforcement, rather than reducing taxes. Reducing taxes will make to***co and e-cigarette products even more accessible to vulnerable Filipinos and go against sin taxesβ health objective of reducing consumption.
Lowering tax rates will not even achieve their desired outcome of making legal ci******es more competitive. Cutting a few pesos per pack will not address illicit trade and will only make ci******es more accessible to the poor and youth while forgoing billions in revenue, at a critical time that the economy is struggling to find fiscal space.
The deceptive proposal is an attempt of the to***co industry to hijack Congress and hijack a reform-oriented bill, or House Bill 10329, to accommodate their own agenda. It will dilute the monumental health and revenue gains from the sin tax reforms.
We call on the House to consult and involve all stakeholders to enable an informed debate on the matter. We urge the Senate to reject the proposal to reduce to***co taxes and not to railroad this proposal. We must see the proposal for what it really is: an attempt to increase the to***co industry's profit margins at the expense of the country's health and fiscal outcomes.
