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The Daily Tribune - Bicam shifting to 80-20 ‘sin’ tax burden, reveals Marcos

In The News
6 December 2012

By Angie M. Rosales | The Daily Tribune

From the original 60-percent share of the burden, as proposed and pursued by the administration, of the tobacco industry in carrying the bulk of the excise tax rate increase to yield the projected P31-billion to P40-billion revenues, the bicameral conference committee appeared to be headed toward an increase by as much as 80 percent.

The Senate’s version of the tax measure, while it pegged a higher target collection than the proposal of the House of Representatives, is seen to be “diluted” or watered down insofar as providing a 60-40 ratio burden sharing under its P40-billion projections is concerned.

“It’s not just one congressman (pushing it to 80-20 ratio) but it looks like it’s going to be their proposal (that they want to see put in place). I can’t tell whether it’s the majority (of the panel members) or not,” Sen. Ferdinand Marcos Jr., member of the upper chamber panel, bared to reporters following the first bicameral conference meeting yesterday.

“Well let’s hope (they will) not (junk the Senate version). No decisions have been made but that is what they say, that it’s going to be their proposal. We have yet to take this up but what I’m most worried is the fact that all of our efforts will be put to naught. All of our agreements have been dropped,” he noted, referring to the amendments introduced in the Senate version of the bill.

The senator, who was one of those strongly opposing the imposition of high rate of increase of taxes on so-called “sin” products, particularly on cigarettes since tobacco farming is the main source of livelihood of his provincemates in Ilocos region, revealed to reporters a supposed plan to tilt the 60-40 burden-sharing to 70-30 ratio or even 80-20 ratio.

“What was our agreement with the administration is that P40 billion of what will be the total incremental revenue is the 60-40 (burden) sharing. What I cannot understand is why are they putting the bulk of it on tobacco (products),” he said.

Sen. Franklin Drilon, acting ways and means committee chairman and co-chairman in the bicameral committee deliberating on the sin taxes, was conspicuously cautious in discussing to reporters what transpired during the closed-door meeting, merely stating that the contentious issues such as the rate of increase and earmarking of revenues have been deferred by the panel.

When asked whether the Senate contingent in the committee will defend to keep the 60-40 sharing, Drilon said the matter is merely a “guide” for the upper chamber and is not actually reflected in their version of the bill .

“There is no 60-40 in the bill that we are presenting, that the Senate passed. That is the guide, that is the computation we arrived at: the P23.5 billion for the cigarettes and the remaining P16 billion for the alcohol,” he told an interview.

Drilon, some two days after the Senate bill was approved on second and third reading some two weeks ago, already anticipated some hard bargaining on the matter of assigning the tax burden for the liquor industry.

“It is on the alcohol side which I expect some difficulty because we have assigned about P16 billion for the alcohol excise tax to achieve the 60-40 ratio, whereas the rates proposed by the House would only be P5 billion. That is where we expect some hard bargaining. I repeat, for the cigarette, it is P23.55 billion for the Senate next year. For the House, it is 26.87 billion. In the alcohol, we have projected P16 billion, as against the House version of about P5 billion. There is a difference and this is where the hard bargaining will be,” he was quoted as saying in a news forum at the Senate last Nov. 22.

Drilon said what was merely settled in the first bicameral meeting were the disagreeing non-rate provisions.

“We have not discussed the burden sharing because that is precisely a matter that we have deferred for further discussion. As I said the rate and earmarking were deferred for further discussion. We had no more time to discuss it. We will meet again tomorrow,” he said.

“Each side explained their positions and we came to an agreement on almost all the items, as we said, which had no relation to the rates and the earmarking,” Drilon said, indicating that what could be considered certain, insofar as the bill is concerned, is the ratification of the money measure before Congress goes on Christmas break beginning Dec. 21.
“That’s part of our timetable,” he said.

Marcos also debunked Drilon’s claims that the 60-40 ratio was merely a “guide” in coming up with a Senate version of the bill.
The said burden sharing, Marcos further revealed, was not merely an agreement on based on the figures or proposal of the Department of Finance but “actually with the President.”