Senator Ralph Recto. INQUIRER FILE PHOTO
MANILA, Philippines—Sen. Ralph Recto said it is now up to his colleagues in the Senate to tweak his committee report on the Senate version of the sin tax reform bill after administration officials criticized the measure for falling short of what the government needs in terms of revenues and public health.
Recto, the chairman of the Senate committee on ways and means, said that the version that came out of the panel represented what he called “equilibrium.”
“There will always be those who’d criticize. There are those who want to raise the tax. There are those who want to bring it down. What we came up with is in the middle. In economics, it’s called equilibrium. We’re neither to the left nor to the right,” Recto told reporters.
One of the authors of the sin tax measure in the Senate already fired her first salvo a day after Recto presented his committee report.
Sen. Miriam Defensor-Santiago called on students and social media users to register their protest against what she called the “death star bill.”
“I am gobsmacked—speechless with amazement—at the committee report. It bears no recognizable resemblance to my bill. It is an abject surrender to the very rich and very powerful tobacco and alcohol lobby,” Santiago said in a statement.
“Under the Santiago bill, government will raise P60 billion for the first year. By contrast, the Recto bill will earn only P15 billion.
Recto illustrated his point that one couldn’t just raise taxes and expect revenues to automatically increase as well.
“If you want to wipe out the deficit, put a tax of P100 on a pack of cigarettes, P100 on a bottle of beer, P100 on a bottle of gin. We’d wipe out the [budget] deficit. But would people still buy those things? Would the tax be collected?” Recto said.
“That wouldn’t be collected. It could only be collected on paper,” he added.
Recto expectedly gained a supporter in the person of Sen. Ferdinand Marcos, Jr., who hails from the tobacco-producing region of Ilocos.
“The increase in taxation is no longer as burdensome,” Marcos told reporters when asked for his reaction to the committee report Recto presented in the plenary on Wednesday.
“Producers on the tobacco side are happy because at least Senator Recto understands the complicated issue of taxation,” he further said, adding that the sin tax under Recto’s proposal became more practical and implementable.
In his sponsorship speech, Recto said too high taxes would tax “to extinction” local players in the alcohol and tobacco industries.
“The danger of pushing taxes up too much is that it may reach the point of diminishing tax returns. As in any product, a higher tax rate does not automatically result in higher collections,” Recto said.
“Moreover, under a regime of super-high taxes, the local players will be taxed to extinction, or elbowed out of the market by foreign-made tobacco and alcohol products. The void will be filled by smugglers,” he added.
But according to Santiago, the Philippines already has one of the lowest prices of cigarettes and alcohol in Southeast Asia.