The Market Monitor Minding the Nation's Business
The horse-trading between Malacañang and Congress over the proposed tax cuts continues.
Reports say the Palace is now seeking as quid pro quo a new tax on beverages, aside from lifting the bank secrecy law, in exchange for the proposed cuts in income and corporate taxes.
President Benigno Aquino III, on the advice of Finance Secretary Cesar Purisima, had rejected the enactment of the bill that seeks to update the tax schedules and take into account the effects of inflation on income.
Marikina Rep. Romero “Miro” Quimbo, chairman of House ways and means committee, said the chamber was ready to approve the bill that would impose an excise tax of P10 for each liter of soft drinks as stipulated in House Bill 3365. He estimates that this would
raise additional revenue of P34.5 billion for the government.
Quimbo said that if the Palace-Congress “bargaining” goes well, it is possible the bill would be approved before Congress takes its Christmas break on December 19.
The revenues to be raised from the new measure would be used to develop sources of potable water for public schools and ordinary communities, Quimbo said.
The Beverage Industry Association of the Philippines (Biap) is up in arms against the bill. A spokesman said that, while the group supports measures that seek to reform the income tax system, it will be mostly the poor consumers who would have to bear the soft drinks tax.
Biap is the umbrella organization for the beverage industry, which includes multinational firms like the Coca-Cola Co. and PepsiCo, and local producers like Mondelez Philippines, Zest-O, Asia Brewery and San Miguel Corp.
Biap said fiscal initiatives must be fair, sustainable and holistic.
“Tax measures that simply trade one form of revenue for another do not and will not address the problems of fiscal reform,” Biap said, adding that House Bill 3365 was “anti-poor and anti-business.”
Biap said it concurred with notable business groups such as the Philippine Chamber of Commerce and Industry (PCCI), Tax Management Association of the Philippines (Tmap), Federation of Philippine Industries (FPI), and the American Chamber of Commerce (AmCham) on the need for genuine income-tax reform.
But Biap said additional tax on basic goods and products commonly purchased by majority of Filipinos, particularly those in the lower socioeconomic classes will make items like coffee, juice and soft drinks more expensive for ordinary consumers.
Quimbo said HB 3365 was more of a health measure than anything else.
“We’ve come to determine that many diseases emanate from the consumption of this readily acceptable commodity [sugar-sweetened beverages] especially by our children so the proceeds will serve not only as additional revenue for the government but, more important, to develop really a healthier population,” Quimbo said.
According to Quimbo, this can be done by first creating sources of potable water in schools and in communities and secondly, by raising the educational awareness of the population in terms of healthier lifestyle, as well as consuming healthy food sand drinks. LUIS LEONCIO