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Lawmakers will consider ‘sin tax’ bills

By Lira Dalangin-Fernandez
First Posted 19:28:00 05/13/2009

Filed Under: Congress, Laws, Government, State Budget & Taxes

MANILA, Philippines?(UPDATE) With the fate of the bill imposing higher taxes on alcohol and cigarettes still up in the air, the House of Representatives has put forward alternative measures to help the government generate the needed revenues to pump prime the economy.

Emerging from a meeting with several House members Wednesday, Finance Secretary Margarito Teves said they welcomed the initiative, but said he hopes the chamber would still pass the sin tax bill.

The alternative measures include the proposed 5-centavo fee on each text messages and calls a fixed tax on oil.

Quezon Representative Danilo Suarez is the author of the fee on text messages and calls, while Pangasinan Rep. Mark Cojuangco is behind the fixed tax on oil.

Suarez earlier said the 5-centavo fee could generate at least P70 billion a year in revenues, which the government could use to computerize public elementary and high schools.

?We were proposing three measures but a lot of our members from Congress are at least considering other alternatives, we welcome a number of these alternatives so I think we have to give them credit for making that creative judgment or contributions to add to our revenues,? Teves said in an interview.

Teves led officials from the Bangko Sentral ng Pilipinas, Department of Budget and Management and the National Economic Development Authority in meeting the congressmen to give them an economic briefing and get update on priority measures expected to boost revenues.

The Department of Finance earlier sought Congress for the passage of three tax bills expected to bring in an additional P35 billion in revenues a year.

These include the rationalization of fiscal incentives, the implementation of a simplified net income tax system (Snits), and the sin taxes.

The first two bills have been passed in the House but have not moved in the Senate.

The sin tax bill, expected to generate P20 billion a year, remains pending at the committee level.

Representative Exequiel Javier, chairman of the ways and means committee, assured the economic managers that the sin tax has not been shelved.

?Please disabuse your mind that we have shelved sin taxes,? Javier said during the meeting.

He said the bill has not passed the committee level because of the proposal for an adoption of a single rate by 2010.

?Finance is proposing one rate for everybody but you know sin products have a range of prices, from the lowest-priced to the highest-priced, and then you tax them with same rate ? We have to have a compromise that is acceptable to everybody, otherwise some of these low-priced will fold up then you?ll have unemployment,? Javier said.

Teves said the DoF was willing to sit down with the congressmen to discuss the compromise version of the bill.

"We do need the help of Congress," Teves told reporters after the meeting with senior members of the lower house of Congress.

Teves said the government promised to help lawmakers look for alternatives to the sin taxes, as long as extra revenues were generated to cover the growing budget deficit.

"Our actual deficit for the first quarter has exceeded the programmed deficit by over 9 billion pesos," he said. "There was no commitment, but they said they will try something."

The finance department wanted Congress to set a uniform but higher tax on products such as tobacco and beer this year.

But legislators were unlikely to approve any new tax measures this year with an election are so close, said Suarez, author of a bill increasing cigarette and liquor taxes.

"I have my doubts it will be passed because of the strong lobby against the measure...I am not getting the proper support from the committee," he said last week.

Voters in the mainly Roman Catholic nation of nearly 100 million will elect a president, vice president, 12 senators, 250 congressmen and 17,000 local officials in May 2010.

The government expects its 2009 budget deficit to balloon to P199.2 billion, the highest since 2003, after Manila raised its spending to stimulate the economy amid the global downturn.

With additional reports from Reuters

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