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Major changes to Philippines sin tax bill: senator

Publication Date : 15-10-2012


Philippine Senator Panfilo Lacson said the parties fighting over the “watered down” version of the sin tax bill in the Senate could expect “major, major” adjustments.

He said the committee report that Senate ways and means committee chair Ralph Recto presented on the floor last week was “not yet the final version.”

Lacson reminded those monitoring the sin tax bill’s progress in the Senate that the measure was crafted for two purposes: To raise more government revenue, part of which would finance the medical expenses of indigent patients; and to discourage tobacco and alcohol consumption by raising their prices through higher taxes.

Lacson said the sin tax measure could be considered “successful” if it fulfills these two objectives. Sacrificing one goal for the other cannot be considered an accomplished mission, he said.

At least three executive branch officials—Finance Secretary Caesar Purisima, Internal Revenue Commissioner Kim Henares and Health Secretary Enrique Ona—were disappointed that Recto’s sin tax bill blueprint would raise only 15 billion pesos (US$361 million).

This figure is a far cry from the House of Representatives’ version that seeks to raise 30 billion pesos from higher tobacco and alcohol taxes.

The Palace wants to collect 60 billion pesos from higher sin tax rates to finance programmes for poor patients, particularly those who suffer health problems due to habitual tobacco and alcohol use.

Recto has proposed a graduated system where taxes on various tobacco grades and liquor distillations are increased gradually before a unitary system of same-level taxes is implemented.

Recto pointed out that if government measures were “too drastic,” it would lead to “reduced revenues” from the tobacco industry.

Sen. Franklin Drilon, chairman of the Senate finance committee, noted that additional revenue from sin taxes had already been incorporated in the 2013 budget of the national government, thereby putting more pressure on his colleagues.

Lacson said one thing going for sin tax monitors was that the senators would not want to repeat their experience when the Senate version of the Cybercrime Prevention Act was passed.

Outrage over provisions

Not all senators had paid specific attention to the bill when it was being discussed. Only after public outrage over provisions for higher penalties for online libel and the takedown provision that allows the justice department to shut down an offensive website did the senators take a closer look at the bill they had approved.

Lacson said sin tax watchers should be consoled by the fact that the finance and health departments were keeping tabs on how things would turn out in the Senate.

Even Senate President Juan Ponce Enrile gave assurances that the sin tax measure would undergo more intense scrutiny.

Enrile, however, warned the Palace against killing the goose that lays the golden egg.

He repeatedly said in earlier interviews that tobacco farmers, in particular, would suffer because of the P3 billion in additional taxes they would be required to pay under the proposed sin tax law.

“After (the Department of Finance) and the (Bureau of Internal Revenue) destroy the industry from which we get money, where will they get the (rest of the) revenue to support the programme?” Enrile asked.

The senate president urged endorsers of the sin tax increase to reconsider a more judicious scheme instead of insisting on the Palace's high revenue targets.

“If they want to kill (the tobacco industry) and that appears to be their point, let’s not go through taxation. Just close down the factories and prohibit (cigarettes),” he said.

As this developed, the PhilTobacco Growers Association (PTGA) lauded Recto’s committee report but noted that the increases he supported for low-priced cigarettes, which make up 60 per cent of the total market, were “still too high with a 120 per cent hike in the first year alone.”

“We appeal to the senators to draft a final version that sets moderate and gradual increases. Any significant drop in the (sales) volumes of low-priced cigarettes due to reduced consumption [as a result of] higher taxes would seriously affect the livelihood of small tobacco farmers and workers,” the PTGA said in a statement.

*US$1=41.4 pesos


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