Jan 03, 2022 to Dec 29, 2022
Funding Agency:
Philippine Institute for Development Studies
Focus Area(s):
Human Development, Labor Markets, and Poverty

The 2012 Sin Tax Law is considered one of the most important health legislations in the Philippines in the recent decade that brought about the necessary reforms to tobacco and alcohol excise taxation. The motivation of the law was twofold: (1) increase public sending on health; and (2) reduce the burden of tobacco smoking. The law helped to address both of these issues by taxing tobacco products as a way to reduce consumption and improve health outcomes and allocate the tax revenues to the health sector. Almost 80% of the tax revenues collected from excise tax tobacco and alcohol was earmarked to the health sector to fund public health programs of the Department of Health (DOH) and premium payments for PhilHealth, both critical in implementing the country’s universal health care program (UHC). Of the total sectoral budget, 80% accounted for the premium subsidy of poor households through the National Health Insurance Program (NHIP) and programs to support health-related Millennium Development Goals (MDGs) of the Department of Health (DOH), while the remaining 20% was allocated to the DOH Medical Assistance Program and the Health Facilities Enhancement Program (HFEP) (Department of Health, 2020). The law also paved the way for introducing more tax reform policies against harmful products. In 2018, the Philippine Congress passed the Tax Reform for Acceleration and Inclusion (TRAIN) Act (RA 10963), which imposed additional consumption taxes on products such as sugar-sweetened beverages (SSB) and heated tobacco and vaping products. The tax revenue was used to fund the social program, including health and nutrition. In 2019 and 2020, the Philippine Congress passed further amendments to the Sin Tax Law, with differential rates for various alcohol and tobacco products. While the earmarking reform has undoubtedly increased public spending on health and reduced the prevalence of smoking, the country has yet to examine whether the earmarked resources were used effectively and strategically by the health sector (that is, DOH and PhilHealth). As to our knowledge, this will be the first study that examines earmarked resources used vis-à-vis health system goals and whether the poorest segment of the population benefitted from health programs funded by the earmarked revenues.

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