Hard fight over ‘sin tax’ seen
Expect some “hard bargaining” between senators and congressmen over the amount of excise tax to be imposed on alcohol products when Senate and House representatives meet to reconcile their versions of the sin tax bill.
Sen. Franklin Drilon, acting chairman of the Senate ways and means committee, has warned that the differing targets set by the two chambers could pose some “difficulty” during the bicameral conference committee next week.
The Senate approved an increment tax of P16 billion from alcohol products, including fermented liquor like beer and distilled spirits.
The House of Representatives’ version raises the tax take to only P5 billion.
“That is where we (the senators) expect some hard bargaining… mostly on the alcohol side,” Drilon told the Kapihan sa Senado forum on Thursday.
Drilon said it was important that the 60-40 ratio between tobacco and alcohol products in the sin tax bill be maintained.
If the House insists on the P5-billion target for alcohol, the ratio would be severely skewed, he said.
Told that the House ways and means chairman Isidro Ungab had indicated a willingness to agree with the Senate’s figure, Drilon said that was “a good starting point.”
Drilon said he expects the negotiations to be easier on the incremental tax targets for tobacco products as the difference in the two chambers’ figures were “not substantial.”
The Senate version targets an additional P23.55 billion in taxes from cigarette products in 2013 while the House-approved bill sets the target at P26 billion.
Drilon said he would be “very pleased” if Ungab and company would accept the Senate-approved targets for tobacco products since senators “really went through (the sin tax bill) with a fine-toothed comb.”
He said the reconciled sin tax bill and the P2-trillion 2013 budget have to be signed into law by Nov. 28.
The Senate began deliberations on the budget Thursday.
Sen. Ralph Recto, the resigned chairman of the ways and means committee, earlier said bicam deliberations would focus primarily on the revenue gap. He noted that the Senate version seeks to raise around P40 billion in new revenues, while the House version sets a target of P31.5 billion.
House Majority Leader Neptali Gonzales II on Thursday said the P8.5-billion revenue-target gap should pose no problem for the bill’s passage.
He said bicam members could meet halfway, perhaps settle on half the amount, to ensure the swift ratification of the measure.
“I think it would not be difficult to find a middle ground,” he said in a phone interview.
Gonzales said the earliest that Congress can ratify the bicam report would be the first week of
Higher credit rating
Also Thursday, Drilon said higher sin taxes could pave the way for a higher credit rating for the Philippines.
He quoted Internal Revenue Commissioner Kim Hernares as saying that credit-rating agencies were “waiting for (the sin tax measure) and it could be a final hurdle for our being in the investment grade.”
If the Philippines earns an “investment-grade” rating, global creditors would lower interest rates on its borrowings and allow the country to realign its debt payments. It could save for social services such as health and education,” explained Drilon. With a report from Christian Esguerra