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Philippines: Senate Passes Sin Tax Bill Adding at Least P12 Per Cigarette Pack Source from: GMANews.TV (ph) 11/29/2012  Defying a lobby that raised the specter of a massive loss of jobs, the Senate on Tuesday passed the Sin Tax Reform bill that seeks to increase excise taxes on alcohol and tobacco products. It was approved after the senators agreed on a P40-billion revenue target for the first year, during which additional taxes will be collected on a 60-40 basis from the tobacco and liquor industries.
The bill will now have to be reconciled with the House version by a bicameral committee before it is presented to President Aquino, who needs to sign it into law. Senator Franklin Drilon said that could happen before the end of the year. "I am pleased to announce that we have passed on second and third reading the sin tax bill. After much negotiation, we have agreed on [a] three-tier system for taxes on cigarettes," Drilon, sponsor of Senate Bill 3299 or the Sin Tax Reform bill, told reporters late Tuesday. The Senate's action pleases both health advocates, who say the higher cost of cigarettes will reduce demand and disease, and the executive department, which is eager to collect the revenues. But the bill was strongly opposed by industry, especially tobacco, which took out full-page newspaper ads and warned of economic dislocation especially in northern Luzon, the nation's tobacco heartland. The bill's passing occurred soon after a dramatic retreat by Senator Ralph Recto, ex-chair of the Ways and Means Committee, who had proposed a version of the bill nearly identical to one formulated by the tobacco industry. After a media firestorm and protests by doctors, Recto withdrew his bill and resigned as chair of the committee. He was replaced by Drilon, who drove the higher-revenue bill forward. The bill, which is also being touted as a health measure, promises to give the government an aggregate revenue of P39.5 billion in 2013; P45.7 billion in 2014; P52.3 in 2015; P57.7 billion in 2016; and P64.4 billion in 2017. The revenue target will be split 60-40 between the tobacco and liquor industry, respectively. The 40 percent from the liquor industry will be split between fermented liquor and distilled spirits on the basis of historical allocation. On the other hand, a unitary rate for cigarettes shall be enforced at the start of the fifth year of the bill's implementation. Only Senators Francis Escudero and Joker Arroyo voted against the bill. Escudero said he has always voted against tax increases on principle, while Arroyo had said that he does not wish to rush the passage of measures just because the Palace wants it. "I hope and wish that their assumptions in so far as this measure is concerned on health and measure would indeed be met and I wish the administration well in so far as the implementation of this act is concerned. Unfortunately, as I said, in order to be consistent in my stay in Congress, I have to vote independently," said Escudero after the voting. Cigarettes Under SB 3299, the excise tax on hand-packed cigarettes shall be: P12/pack (effective Jan. 1, 2013) P16/pack (effective Jan. 1, 2013) The initial proposed unitary rate was initially P32, but Senator Ferdinand Marcos alleged that this would not maintain the 60-40 sharing between the two industries. P10 million to each of the 618 district hospitals operated by local government units for repair and upgrading of facilities and services; P100 million to each of the 16 regional hospitals and 22 medical centers for the same operational and physical upgrading; P750 million for the unemployment package of workers and farmers who will be displaced; and P250 million to job trainings for tobacco and alcohol workers who wish to start anew "This is to combat the possibility, in anticipation [of] the possibility of smuggling and give law enforcement agencies [the capability] to combat smuggling," he said. He likewise inserted a provision requiring tobacco manufacturers to source at least 15 percent of raw materials locally. "I am not prepared to sacrifice interests of people in my region for interests of any other people in the world," said Senate President Juan Ponce Enrile, who introduced the provision. Opposition Arroyo and Marcos had earlier manifested that they did not agree with the consensus of the majority. Marcos said that 18,000 farmers stand to lose their livelihood because of the measure. Aside from this, he also warned of a possible increase in smuggling if the measure is passed into law. Recto, who was replaced as Senate ways and means committee chair by Drilon, had also said he doubts the government will be able to reach the P40-billion revenue target. He also warned the scheme may result in job losses. But on Monday, Recto said he would abide by the decision of the majority. What's important now, he said, is that taxpayers see where the revenue generated from this measure will go. "Ang mahalaga sa akin saan gagastusin ito," he said. Enditem Related Updates |
