The Sin Tax Reform Act of 2012: Will It Really Curb Sin Products Consumption, Or Was It Just Another Mirage To Solons Waltzing Their Way To Heftier Pork Barrels?

If you have not been having better things to do recently, you might have had the reluctance to while away time watching or reading the debates among pro and anti congressmen and senators on the Sin Tax Bill. Finally, it was passed with Pnoy signing the same into law, hence, RA 10351 or The Sin Tax Reform Act of 2012 takes effect on January 1, 2013.

Sin tax, though, is not new. We had the original sin tax bill enacted (RA9334) sometime in January 2005, which mandated varying increases in excise tax rates every two years until 2011.

I am a smoker and a drinker, but I am not addicted to either cig or booze. Even a while back when I was consuming two to three packs a day and quite an amount of beer/liquor every day, I would dare say I was never addicted. I had complete control of my consumption: When I wanted to stop for a period, I did the moment I made the decision. No withdrawal syndrome whatsoever.

Now I consume a lot less: less than a pack a day, except when I drink. It makes sense to think smoke is more enjoyable with alcohol, but I can’t make out any logical explanation to it.

Pardon the digression. Anyway, the law says it is aimed at fixing the inequities in tax structure, removing the price classification that allowed tobacco companies to pay taxes based on 1996 prices, simplifying its administration by shifting from multi-tiered to unitary tax system by 2017.

Whatever the reason, most people support it for one obvious reason. Frankly, I don’t need sophisticated scientific studies to tell me smoking and drinking harm health. Equally, I don’t need anyone to tell me against what fun I derive or even feign deriving from drinking and smoking. To me, drinking and smoking are social activities. The conversation that flows along them makes them addictive (desirable of repetition) not the vice itself.

But then again, I don’t need to lift a finger to convince anyone.

The bigger issue is whether the funds that this new sin tax law is expected to generate will go to the law’s intended purposes. That’s where the government’s reputation has, time and again, proved wanting.

Whatever happened to the study that revealed we were losing some 20-30% (as a percentage to national budget), or as Manny Villar said in 2010, some 250B a year, in taxes to corruption? If the government had concentrated its efforts on plugging the loophole, we may still need the new sin tax law, but it would not have met the fiery opposition it did from the public, since the latter would know where the taxes go.

That the government seemed to have looked the other way still evokes the sentiment on government’s aversion to, nay inability in, finding intelligent solutions to tax collection problems, and reinforces the public’s impression on its propensity to imposing new taxes as a way of coping.

However, this sin tax law could prove to be a double-edged sword. While our tax minds at the BIR and DOF have made all sorts of projection on collections, they fail to acknowledge that as taxes are raised significantly high, the temptation for evasion rises with it. In a high-tax regime, the incentive to evade taxes becomes more compelling to justify taking the risk.

What is in it for Congress?

For sure, this means heftier pork barrel funds (now already at 70m and 200m per congressman and senator, respectively), euphemistically or innocently called Priority Development Assistance Funds (PDAF), to congress occupants. Now, how does one reconcile the corrupt reality of the past to the promise this new law makes under this new administration?

I would say I have faith in the current administration. No doubt it enjoys the confidence of a large majority of Philippine society, and the international community as well. But it’s not to say that stories that allegedly belie the “Matuwid Na Daan” philosophy of the president are nuisance and don’t deserve scrutiny. Some seriously project credibility that, if not looked into, will eventually erode confidence in the president or its administration, and imperil his lofty programs, including the present sin tax law.

I feel for the president, but with over 300 politicians in Congress benefitting from the enactment in the convenient guise of “projects for the people,” it is very difficult to paint a rosy picture against a gloomy backdrop of same old faces wearing business as usual grins.

I have prepared myself for paying more for every stick I light come New Year. The president, too, will pay more when he lights a stick. I wish him not only good health, but steady conviction in making all in government walk his path of “Matuwid na Daan.”