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Manila Standard Today - Marcos slams sin tax burden sharing

In The News
10 December 2012

By Macon Ramos-Araneta | Manila Standard Today

Featured-image-Manila-Standard-TodaySenator Ferdinand Marcos Jr. on Friday criticized moves to put a heavier burden on tobacco companies under the sin tax bill, which is being finalized by the bicameral conference committee.

“We really can’t understand why they did that,” Marcos said, after reports surfaced that the conference committee agreed in principle to revise the 60-40 burden sharing between tobacco and alcohol to 70-30.

With a target of P35 billion in new taxes from both industries, a 70-30 share would mean P24.5 billion from tobacco sales and P10.56 billion from the sale of alcohol.

“If they’re saying the sin tax reform act is a health measure, there should at least be equal tax burden sharing for cigarettes and alcohol products to reduce incidence of smoking and drinking,” said Marcos, who comes from a tobacco-producing province.

Marcos, who agreed to a 60-40 share, said the talk of a 70-30 share showed those who supported a heavier tax on tobacco would accept nothing less, but warned that this would backfire on the government’s efforts to raise revenues.

“They have many wrong assumptions because they want to increase the price of tobacco,” Marcos said. “They like to increase the price of a stick of cigarette to P28. With this price, it is likely that no one will buy cigarettes.”

If this happened, he said, the government would be unable to meet its tax targets.

Marcos added that the Finance Department’s numbers kept changing during the discussions on the sin tax bill.

Marcos said the Senate and House contingent agreed on a target of P35 billion, but there was no agreement on the 70-30 burden sharing.

“But of course, majority members of the House are pushing for it,” Marcos added. “I don’t agree at all. But they don’t care. And the fact of the matter is they will kill the industry. They will put 2.5 million people out of work. I don’t know if that is their intention but that will be the effect.” he said.

He said the tax share should be 60-40 until 2017 as they agreed in the Senate.

But Senator Franklin Drilon said the bicameral conference agreed on the new tax target f P35 billion after six hours of debates Thursday.

The House originally proposed revenues of P31 billion, while the Senate targeted P39.5 billion. Both figures are lower than the government’s original goal of P60 billion.

He also said the bicameral committee set the burden-sharing between cigarettes and alcohol at 70-30 for 2013 and 2014, then 66-34 in 2015, 65-35 in 2016 and 64-36 in 2017.

Cigarettes will have a unitary tax rate after 2017, Drilon said.

For cigarettes with a net retail price of less than 11.50, the tax rate increases are as follows: 2013 – P12; 2014 – P17; 2015 – P21; 2016 – P25; 2017 – P30.

For cigarettes with a net retail price of 11.50 or more, the tax per pack are as follows: 2013 – P25; 2014 – P27; 2015 – P28; 2016 – P29 and 2017 – P30.

For fermented liquor with a net retail price of less than P50.60, tax rates are as follows: 2013 – P15; 2014 – P17; 2015 – P19; 2016 – P21 and 2017 – P23.50.

For fermented liquor worth P50.60 or more: 2013 – P20; 2014 – P21; 2015 – P22; 2016 – P23 and 2017 – P23.5.