The Daily Tribune - 2 senators vow to water down House version of sin tax bill

17 August 2012

By Angie M. Rosales | The Daily Tribune

The-Daily-TribuneThe Palace-backed “sin tax” bill approved by the House of Representatives and transmitted to the Senate, is seen to be watered down in the upper chamber.

Senate President Juan Ponce Enrile yesterday said he will not allow the passage in the upper chamber of a version of the bill based on that of the Lower House that he described as “inequitable,” “distorted” and tend to favor certain tobacco products.
“It’s inequitable. The burden is to the tobacco industry as against the others that are importing some of their raw material. What will happen to our tobacco farmers if its adopted? During summer time that’s their source of income. That’s their only source of income. Tobacco is their cash crop,” Enrile said to reporters emerging from the first public hearing called by the Senate ways and means committee.

Sen. Ferdinand “Bongbong” Marcos Jr. seconded Enrile in questioning the provisions of the bill, pointing out what he noted as detrimental effect on the income or displacement of the estimated three million people who are dependent on the tobacco industry given the hundreds of percentage to nearly 2,000 percent increase, in effect, in tax rate.

But despite these apparent obstacles, administration Sen. Ralph Recto remained confident that they will be able to come up with their version of the measure after three more public hearings and steer its final approval in the plenary by early November or have it take into effect as a law before the end of year.

Enrile was quick to emphasize that he’s not at all against the passage of the bill that is intended to raise revenues, an additional P31 billion income for the national government annually, fair and even treatment, without having to pass on the burden to some sectors in the industry.

“I will not allow that to happen,” he said.

“We will have it passed but only after we have addressed the distortions. We will remove the distortions so there will be equal distribution of (tax rate increases in the tobacco industry),” he added.

Asked if Recto’s time frame in putting into place the Senate’s version of the measure by October would still be feasible, Enrile expressed apprehensions.

“I don’t know. I doubt it,” he said.

Despite the strong stance shown by Enrile and Marcos as well as intense lobbying by tobacco farmers and manufacturers against the bill, Recto said there will only be at least three to four more proceedings.

“Clearly, there is a need (to come up with higher excise taxes) because like I said, the law was designed — that the increases stopped on Jan. 1, 2011 — for us to revisit the same and that’s what we’re doing right now.

“I supposed we can discuss (by the fourth hearing), where do we spend or earmark these revenues that are realistic and therefore in a month’s time we can wrap up the hearings and in a week or two at most to make the committee report; a month to debate it in the Senate; a month for the bicameral (conference proceedings) so we should be done by the end of the year. Early as November, latest December, (this will be) signed into law,” the chair of the ways and means committee said in briefing the reporters after the hearing.

“The next hearing would be reserved for the industry, the players who would take the brunt of this measure once signed into law. We want them to throw us numbers on jobs that may be dislocated and on margins that would shrink should the bill succeed in emasculating the industry that is so dear to them.

“The idea is to come out with a fair, responsible measure that will generate the revenues as well for PhilHealth and other health needs of the health sector in a fair and reasonable manner,” he added.

Tobacco industry players earlier deplored the lopsided sharing of the higher sin taxes under the readjusted P31-billion revenue target in the House-approved version where tobacco products will be made to pay an estimated P27 billion in additional taxes while alcohol products will bear the balance of P4 billion.

Marcos echoed Enrile’s assertions on the supposed unequal imposition of taxes on beer, liquor and tobacco products.
Sen. Franklin Drilon, in another interview, said he is in agreement with the proponents of the bill that rationalizing sin taxes would not only raise funds for government’s health care program but would also help improve the health of ordinary Filipinos.
“That smoking has no known benefit is beyond question. It is costly, it is harmful to one’s health and it kills. That is a fact that has been proven by countless medical studies. And I know this from experience because my first wife died due to lung cancer,” Drilon said.

“I want to spare our people from the tragedy of losing a loved one. This is why we should discourage people from smoking, and one of the ways to do that is to raise the price of cigarettes and make it less accessible to more people,” he said.