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Aquino Trumps Catholic Church, Big Tobacco With Twin Laws

Photographer: Julian Abram Wainwright/Bloomberg

Benigno Aquino, president of the Philippines. Close

Benigno Aquino, president of the Philippines.

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Photographer: Julian Abram Wainwright/Bloomberg

Benigno Aquino, president of the Philippines.

Philippine President Benigno Aquino defeated the Catholic Church and the tobacco lobby by using his popularity to push through twin laws to provide free condoms to the poor and boost taxes on cigarette and liquor.

Lawmakers yesterday ratified a reproductive health bill that had been introduced and blocked repeatedly since 1998, and the legislation will be signed into law before the end of the year, Aquino said. The extra revenue from the so-called sin tax will help the country win an investment grade credit rating, Tax Commissioner Kim Henares said today.

Aquino, 52, endured the possibility of excommunication from the church and criticism from boxing champion Manny Pacquiao and former first lady Imelda Marcos to win support for the health bill. His approval rating is the highest for a president since actor Joseph Estrada in 1999, buoyed by efforts to fight corruption and tackle an entrenched culture of tax evasion.

“Aquino managed to resurrect and rally support for controversial measures in which his predecessors had failed,” said Ramon Casiple, executive director of the Manila-based Institute for Political and Electoral Reform. “His advocacy of these bills was personal and more than ministerial. He made good on his promises and proved that he’s reform-oriented.”

Aquino signed the sin tax bill today, touting its health- care benefits and criticizing opponents of the new law.

“Many thought it was impossible to pass the sin tax,” said Aquino, who is a smoker himself. “The enemy was strong, noisy, organized. Those who were against it had deep pockets.”

Sex Education

The reproductive health bill calls for mandatory sex education and requires the government to pay for contraceptives and family planning services for poor people. The United Nations has said it will help reduce poverty among the fifth of the nation’s 104 million people who live in slum conditions.

The contraceptives bill had been refiled and blocked in each three-year congressional term since it was introduced 14 years ago amid opposition from Catholics, the faith of at least 80 percent of Filipinos.

“Logic and reason won,” said Carlos Celdran, an activist who was jailed for a day after staging a protest at a 2010 meeting of bishops in the city’s cathedral. “It shows that the Philippines is moving into the 21st century and is progressing mentally. It has broken the shackles of the Catholic Church, which no longer wields the same power it had in the past.”

Protesting Priests

In August, more than 9,000 nuns, priests and churchgoers dressed in red held rallies in Manila in an attempt to derail the legislation. The protesters described themselves as pro-life and distributed pamphlets that also denounced divorce and same- sex marriage in addition to the bill.

“Whether or not an individual should live in this world should not be placed in the hands of his fellow men,” boxing champ Pacquiao said during a Congressional debate Dec. 12. “Only God has power over this.”

Imelda Marcos, a Congresswoman and the widow of the late dictator Ferdinand Marcos, said during the same debate that “any law against natural law, the fundamental law of God, is against God.”

One in five women of reproductive age in the Philippines has an unmet family planning need, the UN Population Fund says, leading to unintended pregnancies. The population is growing 1.7 percent a year, compared with 0.9 percent in the Asia-Pacific region, according to a 2011 UN Population Fund report.

The bill “is unfortunate and tragic,” Manila Archbishop Luis Antonio Tagle said after last week’s second reading. “We do not take it as a defeat of truth, for truth shall prevail, especially the truth about human life, marriage and the family.”

Sin Tax

While the church rallied opponents of the reproductive health bill, some of the nation’s wealthiest businessmen were assailing Aquino’s efforts to pass the sin tax, which will raise levies on wine and spirits and calls for twice-yearly tax increases on cigarettes.

San Miguel Corp. (SMC), which controls 90 percent of the nation’s beer market, Asia Brewery Inc. and the Philippine Tobacco Institute ran separate advertisements saying the law will hurt sales and put jobs at risk. Aquino’s uncle, Eduardo Cojuangco, is chairman of San Miguel, while Asia Brewery, Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco Corp. are controlled by billionaire Lucio Tan.

Seven of the 10 leading causes of death in the Philippines, where 28 percent of people aged 15 and older smoke, are diseases related to tobacco consumption, according to data from the Department of Health.

‘Powerful’ Tool

“Higher tobacco taxes will save lives,” the World Health Organization said today by e-mail. “Tax increases that raise the price of tobacco products are the most powerful policy tool to reduce tobacco use and the single most effective intervention.”

The measure may reduce the number of smokers by 170,000 a year, or to 15.6 million by the end of Aquino’s term in 2016, the UN group said. The bill will index tobacco and liquor tax rates by 4 percent yearly to discourage their use, Finance Secretary Cesar Purisima said.

“It’s the best piece of legislation that this administration has passed,” said Modesto Llamas, president of the Philippine Medical Association, which represents 68,000 doctors. Doctors are more divided over the reproductive health bill, “such as on the issue of when does life begin,” he said.

Debt Rating

While the WHO said the sin tax is “primarily a health measure,” it also will provide an important boost to the country’s finances, said Henares, the tax chief.

“The credit rating agencies want to see that we are willing to do what needs to be done to put our fiscal house in order,” she said in an interview today, adding that the sin tax law languished in Congress for more than a decade. “It’s convincing them that we are willing to make hard decisions and can take hard action and implement it.”

Moody’s Investors Service, Fitch Ratings and Standard & Poor’s rate the Philippines a step below investment grade with a stable outlook. A higher rating may help bolster Aquino’s plan to attract $16 billion of investments in roads and airports to spur economic growth to as fast as 7 percent in 2013.

The president’s performance rating after two years in office remained steady at 78 percent last month, according to a poll of 1,200 adults by Pulse Asia Inc. on Nov. 23 to 29.

“Nowadays, no politician would want to be identified as Aquino’s enemy,” Casiple, the political analyst, said. “In next year’s national and local elections, a candidate’s endorsement by the president will be a decisive factor.”

To contact the reporters on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net; Joel Guinto in Manila at jguinto1@bloomberg.net

To contact the editor responsible for this story: Lars Klemming at lklemming@bloomberg.net

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