DOF to focus on enacting higher ‘sin’ taxes to fund UHC

THE contribution of the Philippine Charity Sweepstakes Office (PCSO) to the funds for Universal Health Care (UHC) would be minimal, accounting for only 1.2 percent of the total requirement of PHP257 billion next year.

This is why the Department of Finance (DOF) will devote its efforts instead to push for the swift congressional approval of higher taxes on alcohol products and e-cigarettes to fill the program’s funding gap.

Finance Assistant Secretary Antonio Joselito Lambino II said in a statement on Thursday that passing higher taxes on alcoholic drinks is estimated to add at least PHP15.8 billion in the first year of implementation and PHP111.5 billion over the next five years, based on the version approved by the House of Representatives in the previous Congress.

Further increasing the taxes introduced by the previous Congress on e-cigarettes, such as heated tobacco and vapor (vaping) products will also augment the funding requirement for the UHC program.

“We will focus our efforts on passing the alcohol and e-cigarette tax package for UHC,” Lambino said.

Bridging the funding gap for the UHC program, he said, will enable the Department of Health (DOH) to push through with its plans to upgrade state medical facilities and establish more hospitals in remote areas, hire and train more doctors and nurses, and scale up non-communicable disease prevention services, especially for low-income families.

If the UHC Law or RA 11223 is fully implemented, PhilHealth would be able to widen its coverage to include free consultation fees, laboratory tests and other diagnostic services. PhilHealth coverage for primary care will also be expanded to cover 120 drugs and there will be no limit to primary care treatment conditions.

In keeping with President Duterte’s goal of improving the living standards of the people, the UHC law he had signed automatically enrolled all Filipinos in the UHC program, entitling them to an essential health benefit package that includes primary care, medicines, diagnostic, and laboratory tests.

The signing into law of RA 11346, which imposes higher taxes on cigarettes and introduced a new tax on e-cigarettes, will generate around PHP15.7 billion in revenues in 2020 and PHP129.9 billion over the first five years of implementation, Lambino said.

From 2020 to 2024, all current sources of government funding can cover UHC at around PHP200 billion annually. The cost of the program will start at PHP257 billion in 2020 and grow at an average of around PHP11 billion to PHP12 billion per year, amounting to a five-year total of around PHP1.44 trillion by 2024.

The PCSO, whose gambling operations – except for lotto – remain suspended on orders of the President, accounts for around PHP3 billion or 1.2 percent of the PHP257 billion needed for UHC in 2020.

By 2024, the PCSO’s share will only be PHP3.6 billion or a little less than 1.2 percent of the PHP319 billion funding requirement for UHC.

Over a five-year period from 2020 to 2024, its total contribution to UHC is estimated at PHP16.6 billion, still at only 1.2 percent of the PHP1.44 trillion funding needed for the program, Lambino said.

Under the UHC law, the PCSO’s contribution to the program is 40 percent of the Charity Fund, net of documentary tax stamp (DSY) payments, and its mandatory contributions as provided under its charter.

The other sources of funding would be the taxes collected from ‘sin’ products, 50 percent of the national government share from the income of the Philippine Amusement and Gaming Corp. (Pagcor), the premium contributions of PhilHealth members, the DOH budget and the national government subsidy to PhilHealth.

Lambino said that in the first year, the total funding gap would amount to around PHP49 billion without the PCSO share of PHP3 billion. The contribution of new alcohol taxes based on old calculations from the version passed by the House in the 17th Congress would be PHP15.8 billion, leaving a funding gap of about PHP33 billion.

“We can aim for even higher in the alcohol and e-cig package since the previous version only included alcohol,” he said.