Senator Ralph Recto. INQUIRER file photo
The Senate ways and means committee has asked the Bureau of Internal Revenue (BIR) to identify the specific companies that will pay the P60 billion in additional revenues that it expects to realize from the proposed increase in taxes on tobacco and alcohol.
Senator Ralph Recto, the committee chairman, said he was apprehensive that the more than P70 billion in taxes that are now being collected from the so-called “sin” products would be adversely affected if the proposed increases prove to be too high.
By Recto’s reckoning, since it is already known which companies, products or brands are paying the P70 billion plus, it begs the question where the P60 billion more in revenues that the BIR expects to make from the sin tax hikes would be coming from.
“Who will pay for that?” Recto asked BIR commissioner Kim Jacinto-Henares at a hearing being being conducted by his committee yesterday on the bill proposing to restructure the excise tax on alcohol and tobacco products filed by Senators Miriam Defensor-Santiago and Panfilo Lacson.
The panel is also hearing House Bill No. 5727, the counterpart measure already approved by the House of Representatives.
“Who will be your collecting agents here? What brand are we talking about? Will it be the same products, the same companies? Will it be a different company? A different brand? Who will be paying for the incremental revenues?” Recto asked Henares.
Henares said she could supply the information but would not be able to provide the identities of the companies. She said she would be able to provide the amounts expected to be paid but the companies would have to be identified only in codes.
In last week’s hearing on the sin tax measures, Senate President Juan Ponce Enrile and Recto warned of the adverse effects of raising the taxes too high.
Enrile warned against smuggling becoming prevalent while Recto warned of revenues going down.
“Once you propose radical changes, the problem there is that there is no way to determine who will pay what, and you might be destroying the revenue base to begin with and that’s our biggest concern and you will come back to us to ask for a new tax measure,” he said.
Interviewed after the hearing, Recto doubted that the government’s revenue target was realistic.
“It’s easy to come up with a number of plus P60 billion,” he said.
He agreed with former budget secretary Benjamin Diokno’s observation that the government projection of additional revenues of P60 billion a year and P500 billion in five years was one for Ripley’s “Believe it or Not.”
Recto also expressed puzzlement at the government’s position that it was aiming to make additional revenues while also trying to discourage the public from smoking cigarettes and drinking alcohol.
“Isn’t it inconsistent to say let’s not drink and smoke too much? How can we collect the additional taxes if we’d decrease the consumption?” he said.