People's Journal - Marcos upbeat on Senate sin tax version

26 November 2012

By Bernadette E. Tamayo | People's Journal

Featured-Image-Journal-OnlineSENATOR Ferdinand Marcos Jr. is optimistic that the Senate version of the sin tax reform bill will be “more acceptable” than the one passed by the House of Representatives.

The bicameral conference committee tasked to hammer out differing provisions in the two versions of the sin tax measure is expected to meet this week.

The Senate last week approved on third and final reading Senate Bill No.3299 that aims to generate an incremental revenue of Php40 billion in the first year of its implementation by imposing higher taxes on tobacco products and alcoholic drinks based on 60-40 tax burden sharing.

“Sa palagay ko mas masusundan ‘yung Senate version,” said Marcos in a radio interview. However, the senator warned that he will oppose the final version of the sin tax measure if the previous amendments that he and Senate President Juan Ponce Enrile proposed will be disregarded, including the 60-40 tax burden ratio.

“Kapag masyado namang pinalitan (ang Senate version), eh lalabanan ulit namin ‘yan,” said Marcos, who hails from Ilocos Norte, one of the tobacco-growing provinces.

Sen.Franklin Drilon earlier said that he expects some difficulties in reconciling the Senate and House of Representatives version of the sin tax measure insofar as pegging the target incremental revenue for alcoholic drinks is concerned.

He “foresees,” during the upcoming bicameral conference committee on the sin tax measure, a substantial agreement on the cigarette tax because the Senate had projected about Php23.5 billion as against the House version of Php26 billion.

It is on the alcohol side which he expects some difficulty because the Senate had assigned about Php16 billion for the alcohol excise tax to achieve the 60-40 (tax burden) ratio whereas the House set only Php5 billion. “This is where we expect some hard bargaining,” Drilon said in a previous chance interview.

Meanwhile, the Associated Anglo American Tobacco Corporation (AAATC) lamented that the final version of the excise tax bill approved by the Senate completely ignored the plight of small cigarette makers like them, in favor of manufacturers of premium imported brands.

The extremely high excise tax rates recently approved by the Senate for low-priced cigarettes will wipe out small local manufacturers in the tobacco industry who would have to cough up money to advance tax payments that are even higher than the capital needed to make their products, AAATC said.

Blake Dy, vice-president of AAATC, noted that more than the big players, small manufacturers such as AAATC would have to lay off workers and eventually fold up their operations under the Senate-approved tax scheme.

“No business can survive under this setup where we would have to go deep into debt even before we are able to make a sale of a single pack of cigarettes in order to pay the high taxes in advance,” Dy said.

“Worse, we would lose our market if we abruptly increase our prices because we cater to smokers from the low-income bracket who’ll likely switch to illegal cigarettes instead,” he said.

He said that SBN 3299 imposes a 341 percent tax increase on low-priced brands in the first year, which will climb to 855 percent in 2017.