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Business Mirror - Bicam panels brace for heated debates on earmarkings in higher ‘sin’ tax bill

In The News
10 December 2012

By Butch Fernandez | Business Mirror

businessMirrorSENATORS are anticipating tougher deliberations with their House counterparts on earmarking of revenues from higher alcohol and tobacco taxes when bicameral talks resume on Monday to wrap up the final version of a scaled down P35-billion “sin” tax reform bill that lawmakers hope to ratify before goes on Christmas recess next week.

Under the Senate-approved version, at least P23 billion of the expected revenue take from readjusted excise taxes on all brands of cigarettes and alcoholic drinks is to be set aside for government’s universal health care, including additional funds for public hospital services, as well as subsidies to affected tobacco farmers.

But members of the House panel argued during the first round of bicam talks last week, that such earmarkings should not be included in the sin-tax bill, which the congressmen assert as a revenue-raising measure, and should instead be tackled separately by the House Appropriations and Senate Finance committees.

As adopted by the bicam panels, total incremental revenues over a five-year period would amount to P248.49 billion, from higher tobacco taxes pegged at P164.47 billion, beer taxes at P48.53 billion and distilled spirits at P35.34 billion.

Sen. Franklin Drilon, who chairs the Senate panel in the bicam talks, confirmed that the conferees agreed to resume negotiations on the issue of earmarking sin-tax proceeds for the health sector when they meet anew on Monday.

In an interview, Drilon voiced hopes they could wrap up bicam talks on the sin-tax bill on Monday so that the money measure can be ratified by Congress before it adjourns for Christmas recess, which would enable President Aquino to sign it into law so it could take effect by January 1, 2013.

Tobacco farmer’s campaign

THIS developed as tobacco farmers warned lawmakers they intend to make good their threat to campaign in the 2013 elections against senators and congressmen who would back approval of the steep tax hikes they fear would kill the local cigarette industry.

In a statement, the Philtobacco Growers Association (PTGA) said they will campaign not only on the streets but also online via the Internet and social-networking sites to ensure that “anti-farmer, anti-labor” senators get zero votes not only in the vote-rich provinces of Northern Luzon, but also in other regions in the country.

“Tulad ng sinabi na namin noon, halos magmakaawa na kami sa ating mga mambabatas na pakinggan naman ang aming panig at bigyang konsiderasyon ang aming kabuhayan at ang kinabukasan ng aming mga pamilya. Pero nagbingi-bingihan sila,” said PTGA President Saturnino Distor who added the affected farmers’ group covers 4.5 million votes from tobacco producing regions, including the provinces of Pangasinan, La Union, Ilocos Sur, Ilocos Norte, Abra, Cagayan, Isabela and Mindoro.

Doom for small cigarette firms

LOCAL tobacco companies operating in the country for over 50 years now will be forced to shut down operations and lay off hundreds of workers once Congress passes a law that would burden?? low-priced cigarette brands with extremely high taxes in order for the government to raise an additional P33.9 billion in aggregate revenues by 2013. “We are doomed,” said Blake Dy,? vice president of the Associated Anglo American Tobacco Corp.,? a small cigarette manufacturing firm that has been operating in the country for 70 years now. ?

The division of the tax load, he added is a far cry from the current setup in which the expected revenues from excise taxes are equally shared by tobacco and alcohol products, and from the Senate proposal of tobacco taking up 60 percent of the burden and alcohol, 40 percent. ?

“They have just signed out death warrant.? Local tobacco companies would not be able to survive under this grossly inequitable, unfair system that clearly? favors alcohol with reasonable increases while killing us with exorbitantly high tax hikes. I hope these solons and the anti-tobacco advocates? are prepared to find new jobs for our employees because we cannot,” said Dy.

Dy lamented that their repeated appeals for fairness and justice have fallen on deaf ears with Congress even increasing the tax hikes for low-priced brands by 1,003 percent, much higher than the Senate’s proposed increase of 855 percent.

How did that happen?

SEN. Bongbong Marcos, who hails from the tobacco-producing Ilocos province, protested the apparent bias against the tobacco industry in terms of burden sharing with alcohol during the bicam deliberations. “Hindi namin maintindihan kung bakit nila ginagawa ’yun. Kung sinasabi nilang health measure ito di dapat sabay-sabay na tinataasan ang presyo para mabawasan ang umiinom, mabawasan ang nagsisigarilyo.”

Marcos indicated he would seek an explanation when the talks resume on Monday. “Bakit ang nangyari binawasan nila ang sa alcohol at tinaasan ang sa tobacco? So ang nangyari, ime-maintain nila for the next five years ’yung sa alcohol pero ’yung sa tobacco paakyat ng paakyat. So ’yung burden sharing pabigat ng pabigat sa tobacco.