Senators debate Drilon’s substitute sin tax bill

Senate of the Philippines. INQUIRER FILE PHOTO/JESS YUSON

MANILA, Philippines – Senators finally started plenary debates on Tuesday on a substitute bill that seeks to generate between P40 billion and P45 billion from alcohol and tobacco.

The substitute bill was introduced on the floor by Senator Franklin Drilon, acting chairman of the Senate  committee on ways and means,  after  a caucus  held before the  session.

“In accordance with our caucus, may I move that the period of interpellation for Senate b Bill  3299 be terminated and  we be allowed to file a substitute bill which will be the basis now of the  questions on the period of interpellation,” Drilon said.

No one objected to Drilon’s motion.

The senator then proceeded and explained that the proposal would generate between P40 billion and P45 billion, higher than the original P15 billion to P20 billion proposal by the committee  then being headed by Senator Ralph Recto.

The new proposal was also higher than the P30 billion revenue target that the House of Representatives has approved, but lower than the  P60-billion original proposal of Malacanang.

“Our version adopts that of the Lower House with the added feature that on January 1, 2016, all cigarettes will have a unitary tax rate of P32.00,” Drilon said.

“Further, the rates for the cigarettes packed by hand were changed from P7.56 to P12 on January 1, 2013;  P 22 on January 1, 2014;  and P28 for January 1, 2015 to follow the lowest rate of the cigarettes packed by hand,” he said.

The incremental taxes from these amendments, Drilon said, should generate an estimated P26.87 billion on the first year.

For fermented liquor or beer, Drilon said the bill  provides for a two-tier system “with the products whose net retail price (NRP) do not exceed P22 taxed at P20. For those whose NRP exceeds P 22, the same shall be taxed at P25.”

Once in placed, Drilon said they expect to generate incremental revenues amounting to P12.5 billion.

“All in all, we expect to generate between P40 billion and P 45 billion in incremental revenues on the first year when the reforms are set in place,” Drilon said.