The Market Monitor Minding the Nation's Business
Proposals to amend the so-called sin tax law to revert to a two-tier sin tax system, embodied in a bill that has been approved by the House of Representatives, may have to wait longer as the Senate said it would still review the overall impact of the Sin Tax Reform Law.
Signed in 2012, the Sin Tax Reform Law, now commonly referred to as sin tax law, provided that the sin tax schedule would have a single 30-percent rate by the start of this year.
Sen. Juan Edgardo Angara has informed the Department of Finance (DOF) that the Senate had set up last year an oversight committee to review
the impact of the sin tax law on both revenue collections and public health.
Angara, chairman of the Senate panel of the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP), said in a letter to Finance Secretary Carlos Dominguez III that the Senate has already started the process of reviewing the sin tax law.
The Senate panel “has already been constituted” and has Senators Francis Pangilinan, Risa Hontiveros, Joel Villanueva, and Senate Minority Leader Ralph Recto, as members, Angara said.
“We assure you that the COCCTRP is doing its best to fulfill its mandate to review the impact of the Sin Tax Reform Act and ensure that its revenue implications will help finance the Universal Health Care program of the government, and would contribute in addressing public health issues relating to alcohol and tobacco consumption in the country,” Angara said in his letter.
Dominguez had urged to legislators to allow the Sin Tax Reform Law to “run its course” including Section 11,
Last Dec. 8, he issued an appeal — ahead of this year’s adoption of a unitary tax system for tobacco products as mandated by the sin tax law—for Congress to allow the full implementation the law and to let it run its course, including Section 11, which states that “starting the third quarter of calendar year 2016, the committee (referring to the COCCTRP) is mandated to review the impact of the tax rates provided under this Act.”
Dominguez said the DOF considers “the Sin Tax Law or Republic Act 10351 to be a very good law.”
Dominguez also said the DOF expects “this review to occur” as mandated by law and for it to “be done well to inform (us) what we should be doing in the future.”
Angara, who is also chairman of the Senate Committee on Ways and Means, said in his letter that he has likewise sought information that would assist the panel in the review of the proper implementation of the six tax law from several government agencies.
Aside from the Finance department, the other agencies that have so far submitted data to the panel are the bureaus of Internal Revenue and of Customs; the departments of Labor and Employment, Health, and Budget and Management; the Philippine Statistics Authority; the National Tobacco Administration; and the Technical Education and Skills Development Authority.
The House of Representatives last Dec. 13 approved on third and final reading the bill seeking to retain the two-tier excise-tax rate on tobacco products.
House Bill 4144 was approved through nominal voting with 176 votes, 30 against and 3 abstentions.
Filed by ABS Party-list Rep. Eugene Michael de Vera, the measure would amend Section 145 paragraph (c) of the National Internal Revenue Code.
Under the present set-up, cigarettes with a net retail price of P11.50 per pack are taxed P25 per pack, while those priced higher than P11.50 would be taxed P29 per pack.
Under HB 4144, a pack of cigarettes with a net retail price (excluding excise and value-added tax) of P11.50 would be taxed P32, while a pack with a net retail price of more than P11.50 would be taxed P36.
In pushing for the bill’s passage, De Vera said his proposal would protect local tobacco farmers, especially those from Northern Luzon who would be displaced by the uniform excise-tax rate.
“If the law is not amended, this would not prevent consumers from buying high-priced cigarettes because the price disparity between the high-priced and low-priced cigarettes would be minimal,” De Vera said.
“Imbued by competition, cigarette manufacturers may also opt to import tobacco leaves instead of purchasing the locally grown tobacco leaves, considering that tobacco leaves grown abroad are of better quality, thus diminishing the demand for tobacco leaves produced domestically especially for the lower grade tobacco types such as Grades D, E, F-1, F-2 and R,” he added. House leaders have fully supported the bill.
Quirino Rep. Dakila Carlo Cua, chairman of the House Committee on Ways and Means, said the proposed amendment to the sin tax law is a balancing act of Congress as it takes into consideration the original objective of RA 10351, which proposed higher excise-tax rates for tobacco products, on the one hand, and the livelihood of Filipino tobacco farmers, on the other hand.
He said the upcoming unitary taxation is unreasonable because this is tantamount to imposing the same amount of tax in buying either an imported Mercedes-Benz or a locally assembled private jeep, known hereabouts as “owner-type jeep.”
“The situation would be similar to Filipino tobacco farmers who are about to lose their livelihood under a unitary system that will be implemented starting January next year unless the sin tax law is amended,” he stressed.
Cua, whose committee approved the proposed amendment last December 5, said the proposal will protect local tobacco farmers, raise more revenues for the Duterte administration and promote public health because raising tax will help reduce the number of smokers. LUIS LEONCIO