British American Tobacco (BAT) is pushing for the House of Representatives' approved version of the Sin Tax Reform Bill that would yield incremental revenues of P31.35 billion in the first year of implementation. In a position paper, BAT asked lawmakers to pass a bill that would level the playing field in the industry, not the Senate committee report that Sen. Ralph Recto had endorsed.
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"BAT's position on the Sin Tax Reform Bill has consistently argued for two principles: advocating for a level playing field and supporting fair and equitable government revenues from the industry," BAT said. Recto's committee had endorsed a bill that would translate to only P15 billion in incremental revenues from sin taxes, just half of the P31.35 billion to be raised from the version that the House had approved, and only a quarter of the P60 billion originally targeted under the Department of Finance (DOF)-backed bill. The American tobacco firm said the industry needs the removal of the classification freeze of old brands and collapsing the premium and high tiers. "Through the sin tax reform process, the Aquino administration has taken a bold and courageous step to fix these inequalities," BAT said. BAT said excise revenues that the tobacco industry in the Philippines had generated have not kept pace with the growth in other sectors over the years. It was to a very large extent the result of the inequitable and unreasonably low excise system, BAT added. BAT expressed hope that the final outcome of the sin tax reform process would translate into a level playing field in the industry. "We respect the Philippine legislative process, and hope and believe that it will deliver a level playing field, fair and equitable taxation, and above all a result that best serves the interests of the country," BAT said. At the House, the head of the bloc from tobacco-producing provinces backed yesterday Recto's version of the Sin Tax Reform Bill. La Union Rep. Victor Ortega, head of the Northern Luzon Alliance (NLA), said Recto's bill is the "better and more realistic" version. "The Recto proposal is more reasonable than the version that came from the House because it will raise also additional funds (where) the increase is not too abrupt," he said. Ortega said Recto's version "will at least protect the interests of tobacco farmers in the country." "I'm not defending smoking," he said. "I am trying to see its effect on tobacco farmers. The main crop of our farmers in Ilocos region is tobacco. Hitting their livelihood would be disastrous." Zambales Rep. Mitos Magsaysay said Recto should be commended for coming up with a "responsible, well-studied version" to increase excise taxes on tobacco and alcohol products. "The report submitted by Senator Recto's Senate ways and means committee does more good for public health than what was passed by the House or what was originally proposed by the DOF because the revenue goals in his bill are attainable and his proposed programs for healthcare are workable and sustainable," she said. Recto had taken into account all the necessary factors in crafting the bill, including the poor tobacco farmers and other small stakeholders, she added. Magsaysay said the 1,000 percent tax increase on sin products that the DOF had originally proposed to raise P60 billion was uncovered as a non-viable option based on consultations done with government tax experts. Recto's bill if carefully studied, will show that it is a much better option than the version approved in the House, she added. At the Senate, Sen. Panfilo Lacson said major amendments should be expected after the interpellations on Recto's version of the Sin Tax Reform Bill are concluded. Speaking over dzBB radio, Lacson said his version of the bill would peg the tax rate on the net retail price of the products, not on the current excise taxes imposed on them. "The rule of taxation is that it shall be uniform and equitable," he said. "There should be fair and equal application of the law (under the Constitution). His version also calls for the imposition of a unitary tax rate across all products by January 2014, something which the Recto version envisions only in 2020, he added. In a separate interview, Senate President Juan Ponce Enrile said taxation cannot be used as a means to control anything, including the consumption of cigarettes and alcohol because it is meant to generate revenues for the government. "If they want to kill the industry, don't do it through taxation," he said. "Let us just prohibit it." Enrile said that the government must consider the fact that by killing the two industries, it is not just going after the smokers and drinkers but also the livelihood of workers employed by the manufacturers, their families who depend on them, the tobacco farmers and even the ordinary laborers who count on the consumption of those products to give them a relief from stress. A substantial increase in the prices of tobacco and alcohol would most likely result in the proliferation of smuggling and manufacture of fake substitutes to fill the supply gap in the market, he added. It would be up to Malaca?ang to convince allies in Congress to support its version of the bill before it is put to a vote in the Senate or a decision is made in the bicameral conference committee, Enrile said . Lacson said the present debates on the sin tax bill reminded him of the past effort to adjust the rates on alcohol and tobacco products during the previous administration, which he said was somewhat questionable. A meeting among the leaders of Congress and the chairmen of the ways and means committees of the Senate and the House of Representatives was held at the home of former President Gloria Macapagal-Arroyo before the sin tax bill was voted upon by Congress, he added. A problem arose when the representatives of the two major tobacco companies -Philip Morris and Fortune Tobacco - were also present, he said. Lacson said the final version of the bill that was approved then favored the two cigarette manufacturers. "There was an outcry from the other brands because it was inequitable, they were paying a higher tax," he said. Lacson said that he was not saying that Recto, who was also chairman of the ways and means committee when the previous adjustments to the sin tax were made, was favoring a particular group with his current recommendations on the bill. "I am not judging or suspecting Senator Recto because he is an ally of the administration," he said. "I'm not saying that he favored a particular group. But because this is a collective effort and Senator Recto did not conduct the hearings on his own." Lawmakers must not lose sight of the bill's objective to discourage smoking and drinking by raising taxes on tobacco and alcohol products, Lacson said. 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